Meadowbrook Ends Reinsurance Deal with Swiss Re

Meadowbrook Insurance Group Inc. and Swiss Re have commonly approved to end a quota-share reinsurance contract that was put in lay delayed previous year, Meadowbrook declared Wednesday.

The insurer said it has reinforce its fiscals and the reinsurance is no longer essential.

In 2012 December, Meadowbrook penetrated into a quota-share reinsurance agreement with Swiss Re, yielding about $200 million of premiums on chosen business. Effective Dec. 31, Meadowbrook moved 50% of its unwarranted premium on the chosen business to Swiss Re, and it also started yielding 25% of straight printed premium on the preferred books on 2013, Jan. 1.

At some point in the first six months of 2013, this contract presented excess aid, but also amplified the the insurer’s collective ratio by 3.2 percentage points and abridged net after-tax operating income by $4.1 million, or $0.08 per share, Meadowbrook reported, noting that the annihilation applies to business effectual as of Oct. 1, 2013.

In a declaration, Meadowbrook’s President and Chief Executive Officer Robert S. Cubbin said the company is making growth strengthening its balance sheet. He said in the statement that with statutory surplus of $498.4 million at June 30, 2013 and the reductions in premium-to-surplus ratios, Meadowbrook “no longer needs the quota share agreement with Swiss Re.

Cubbin said that Meadowbrook continues to partner with Swiss Re as the lead reinsurer on its core workers’ compensation excess-of-loss treaty.

“The joint termination of this agreement, along with growth in profits from our net commissions and fees, achieved rate increases [that exceed] loss ratio drifts across our core business, and the execution of our policy issuance agreement with the State National Companies, places Meadowbrook in a tough financial position and creates the framework for a return to profitability,” Cubbin said.

In August, after A.M. Best downgraded the financial strength ratings of the insurance operations of Meadowbrook from “A-“ to “B++,” the insurer announced on that it had entered into an agreement with State National Insurance Co. to provide “A” rated policies for a portion of its business.

Source: www.insurancejournal.com