As indicated in the A.M. Best press release, Eagle “remains under review with developing implications”. Best continues, stating “This follows the termination of the 80% quota share reinsurance arrangement with the Kemper Insurance Companies inter-company pool effective January 1, 2003, and its pending successful and timely conclusion of capital enhancing efforts and reinstatement of the inter-company reinsurance pooling arrangement between Eagle Pacific and Pacific Eagle”.
In addition to Eagle’s unchanged “B+” (Very Good) rating, Eagle policyholders continue to have the added security provided by the National Indemnity (“A++, Superior” A.M. Best Rating) “cut through” agreement, recently made available.
Eagle Group, as set forth in the A.M. Best press release, has cancelled the 80% prior quota share reinsurance arrangement with Lumbermens Mutual, lead company of the Kemper Insurance Companies. It has already made the appropriate filings with regulators in Washington and California. These filings are pending approval. Also as a matter of record, Eagle, purchased in 1998, has never participated in assuming any risk under the Kemper Companies Pooling agreements, and thus has no direct participation in the loss results of other Kemper Companies.
Further, the A.M. Best announcement underscores the plan to enhance Eagle Group’s capital being pursued by its management. Our goal is the restoration of the “A” (Excellent) rating once again.
As you monitor our progress in the coming months, be assured that Eagle Insurance Group remains strong and is positioned to lead the market in our chosen workers’ compensation specialty niches. Eagle Insurance Group finished 2002 with a combined ratio of 83%, an outstanding result compared to the estimated workers’ compensation industry average of 113% (A.M. Best estimate). With respect to Insurance Regulatory Information System (I.R.I.S.) 12 test ratios used by the NAIC to gauge insurance company solvency, the scores of Eagle Pacific, our lead company, are very favorable with only one exception, a slightly unusual value on investment yield. The combined surplus of the two companies increased by 3.4% to $52.4 million, and remains subject to the regulators in Washington and California, the states in which our two insuring companies are domiciled.
Eagle Insurance Group is moving forward decisively to provide a stable and competitive market for our producers and solid security for our policyholders, now and into the future. We anticipate continued strong results on the top and bottom line. We believe that capital sources will recognize our value and provide the enhancements needed to finance our future growth.
We sincerely appreciate your strong support of Eagle through this transitional period, and with your continued support, our future mutual business success is assured.