Indianapolis-based Grain Dealers Mutual Insurance Co., one of the largest property-casualty insurers in the state, has
closed on a deal to became part of The Main Street America Group, the Jacksonville, Fla.-based company said Tuesday
Financial terms of the transaction, which was first announced in July, were not disclosed. The agreement has been approved by directors of both firms and recently received the consent of the Indiana Department of Insurance. Department of Insurance Chief Financial Examiner Connie Ridinger said no money changed hands between the companies.
Don Malcom, president and CEO of Grain Dealers Mutual, will continue to oversee the company’s operations from its Indianapolis headquarters on Corporate Drive near West 62nd Street.
Further, the company will retain its name and continue to sell insurance policies under the Grain Dealers Mutual name.
It will, however, give up management oversight to Main Street America, and its board of directors will be replaced by Main Street directors.
Grain Dealers Mutual’s financial struggles in recent months prompted the affiliation. In March, rating firm A.M. Best Co. downgraded its financial strength rating to B (Fair) from B+ (Good) and the issuer credit rating to “bb” from “bbb-.” The rating actions reflect the company’s “deteriorated capital position, its history of volatile operating performance, uncertainty regarding its future pension liability and its ongoing exposure to weather-related losses,” A.M. Best said.
Under the new affiliation, Grain Dealers Mutual should be able to share Main Street America Group’s A rating, which ensures policyholders of the firm's claims-paying ability.
Grain Dealers Mutual also should benefit by pooling its premium, losses and underwriting expenses with other Main Street America companies, the two insurers said.
“Our affiliation with Grain Dealers Mutual is another key step in fulfilling Main Street America’s long-term strategy of sustaining profitable growth while spreading risk and increasing scale through geographic diversification,” Tom Van Berkel, Main Street America’s president and CEO, said in a written statement.
The Indianapolis insurer was founded in 1902 and for many years was located at 1752 N. Meridian St. It sold the building to local accounting firm London Witte Group in August 2008. Grain Dealers Mutual also has an office in Greensboro, N.C., which it will continue to maintain.
Grain Dealers Mutual had assets in 2007 of $57.4 million, ranking it as the 10th-largest property-casualty insurer in the state, according to statistics provided to IBJ. It wrote nearly $33 million in premiums in 2008, the company said.
The company provides coverage in nine states, with Indiana, Mississippi, North Carolina and Oklahoma accounting for its largest volume of business. As of 2007, the company employed 83 people, including 59 in Indiana, according to IBJ statistics.
Two-thirds of its business is commercial and a third is in personal lines. Commercial multi-peril, homeowners and private passenger auto account for the majority of the company’s lines of business.
Founded in 1923, The Main Street America Group operates five property-casualty insurance carriers in 24 states: NGM Insurance Co., Old Dominion Insurance Co., Main Street America Assurance Co., MSA Insurance Co. and Great Lakes Casualty Insurance Co.
It wrote $800 million in premiums last year and insures more than 600,000 policyholders.