Mutual insurance companies amalgamate

By in Community, Finance

The recent amalgamation of two area insurance companies will benefit policyholders and ensure company stability for agents, brokers and staff, says the president of the amalgamated company.
The Germania Farmers’ Mutual Fire Insurance Company, based out of Ayton, and the Culross Mutual Insurance Company of Teeswater, will now be known as the Germania Mutual Insurance Company.
Final approval for the amalgamation was received from the Financial Services Commission of Ontario in late December, with the amalgamated company assuming operations January 1, 2010.
Germania president Dan Hill explained the decision to amalgamate is a good one for both companies.
“The board of directors and management of Culross had previously tried various alternatives to amalgamation but were unsuccessful in making their company stronger through that process,” Hill said, adding the Culross board formally approached Germania almost a year ago to investigate the possibility of amalgamation, believing the two companies were the best fit for their policyholders.
Hill explained Culross’ amalgamation with Germania offers not just long-term stability, but also broader policy coverage for Culross policyholders and enhanced underwriting products.
“The Germania Mutual policyholder will not likely notice any immediate change as a result of the amalgamation”, Hill said, adding both companies’ policyholders, agents, brokers and staff will benefit from the long-term stability of their insurer and lower expense costs which should translate into controlled premium costs.
In 2008, Culross Mutual wrote $1.4 million in gross written premium and had a surplus of $737,000. Germania at the same time had $10.9 million in gross written premium and a surplus of $8.9 million. Although Culross had decent growth in gross written premium, they unfortunately were required to write down some large investments which drastically affected their 2008 financial statement and their surplus position, Hill explained.
Meanwhile, Germania also showed a “sizeable growth in gross written premium”, Hill said, “we too realized  large losses on our investments as well as increased loss activity on both individual claims and catastrophic losses, highlighted by over $1 million in damage claims during a major windstorm on December 28, 2008.”
An estimated seven per cent premium growth is expected for the newly amalgamated company in 2010 and only a small surplus growth due to consolidation of expenses, Hill said, with gross premiums expected to be at $14.5 million in 2010 with a surplus of $11 million.
Hill welcomes Culross clients, saying he looks forward to serving both their and the Germania policyholders’ insurance needs in the future.
The Germania Farmers’ Mutual Fire Insurance Company has been serving residential, agricultural and commercial policyholders since 1878. In November 2007 the company officially opened its new head office building on Mary Street in Ayton.
The Culross Mutual Insurance Company, based out of Teeswater, has been in business since 1872.
The newly-amalgamated company will operate primarily out of the Ayton office, with some operations remaining in Teeswater. Dan Hill has been named as company president and a 12-member board of directors, consisting of nine Germania directors and three Culross directors will be responsible for the governance responsibilities of the new corporation.