Back Through Time System Launched

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1 5 75 Fifty-five property/casualty insurers and 1 life/health insurers have maintained a Best s Financial Strength Rating of A or higher for at least 75 years. Since 196, A.M. Best Co. has been issuing financial strength ratings opinions on the ability of individual insurance companies to pay claims on the coverage they have underwritten. These financial strength ratings evolved over the decades as the insurance industry grew more complex. A select group of insurers has consistently maintained strong financial strength ratings for the past 75 years despite catastrophic storms and tough economic times. 6 Best s Review july 9

2 The property/casualty and life insurance companies that have maintained a Best s financial strength rating of A or higher for at least 75 years are recognized here, as are the insurers that have maintained a similar record of financial strength for at least 5 years. Additionally, we recognize nine insurers that exemplify Standing the Test of Time in one-page news articles as part of this feature. Back Through Time To identify the companies with the longest record of consistent financial strength, Best s analysts pored over the rating agency s proprietary data primarily Best s Key Rating Guides and Best s Insurance Reports to accumulate and verify ratings and other pertinent data dating back to 195. A.M. Best s Rating Scale has changed over time in an ongoing effort to increasingly distinguish the relative financial strength of insurers and adapt to changes in the insurance industry. Therefore, in certain circumstances it was necessary to translate or convert various older ratings to conform to the present rating scale. Please note that these translations do not represent any material change or re-evaluation of a company s rating; they are merely a conversion from one scale to another. System Launched The or iginal rating system, implemented in 196, was devised by the company s founder, Alfred M. Best. In 193, a new rating scale, General Policyholders Ratings, replaced the previously used Desirability Ratings, which applied only to property/ casualty insurers. Desirability Ratings consisted of two components: a loss-paying record, ranked on an alpha scale with A being the best; and a rating of management quality, ranked 75 Property/Casualty Insurers Rated A or Higher for 75 Years A or Higher Current Company Name AMB# Since Rating AIG Casualty Co A American Automobile Ins. Co A American Insurance Co A American States Insurance Co A Amica Mutual Insurance Co A++ Baltimore Equitable Society A+ California State Auto Assn. IIB A+ Camden Fire Insurance Assoc A Continental Casualty Co A Country Mutual Insurance Co A+ Euler Hermes Amer. Credit Ind A+ Farmers Mutual Ins. Co. of NE A Federal Insurance Co A++ Federated Mutual Ins. Co A+ Fidelity and Deposit Co. of MD A Fireman s Fund Insurance Co A General Ins. Co. of America A General Reinsurance Corp A++ Germantown Mutual Ins. Co A Granite State Insurance Co A Great American Insurance Co A Great Northern Insurance Co A++ Hartford Accident & Indem. Co A Hartford Casualty Ins. Co A Hartford Fire Insurance Co A Hartford Steam Boiler I & I A+ Hartford Underwriters Ins. Co A Insurance Co. of the State PA A Lititz Mutual Insurance Co A+ Merrimack Mutual Fire Ins. Co A+ Montgomery Mutual Ins. Co A Munich Reinsurance America Inc A+ Mutual Assurance Society of VA A+ National Fire Ins. Hartford A National Union Fire Ins. Co. PA A Nationwide Mutual Ins. Co A+ New Hampshire Insurance Co A New Jersey Manufacturers Ins A++ OneBeacon Insurance Co A Pacific Indemnity Co A++ Peerless Insurance Co A Pharmacists Mutual Ins. Co A Philadelphia Contrib for Ins A+ Providence Mutual Fire Ins A Continued on page 8 Best s Review july 9 7

3 75 Property/Casualty Insurers Rated A or Higher for 75 Years Continued from page 7 A or Higher Current Company Name AMB# Since Rating Quincy Mutual Fire Ins. Co A+ Selective Ins. Co. of America A+ St. Paul Fire & Marine Ins. Co A+ State Automobile Mutual Ins. Co A+ State Farm Mutual Auto Ins. Co A++ Tri-State Insurance Co. of MN A+ Twin City Fire Insurance Co A United Services Auto Assn A++ Western Surety Co A Westfield Insurance Co A Westport Insurance Corp A Source: A.M. Best Data. Ratings as of May 18, 9 75 Life/Health Insurers Rated A or Higher for 75 Years A or Higher Current Company Name AMB# Since Rating Aviva Life and Annuity Co A Beneficial Life Ins. Co A Country Life Ins. Co A+ Genworth Life and Annuity Ins A John Hancock Life Insurance A++ Metropolitan Life Ins. Co A+ Nationwide Life Ins Co. of Amer A New York Life Ins. Co A++ Northwestern Mutual Life Ins A++ Penn Mutual Life Ins. Co A+ Principal Life Insurance Co A+ Prudential Ins. Co. of America A+ Standard Insurance Co A Western and Southern Life Ins A++ Source: A.M. Best Data. Ratings as of May 18, 9 on a numeric scale with 1 being the best. Evolving The rating scale adopted in 193 had two components: the Net Resources Rating, the forerunner of today s Financial Size Category; and the General Policyholders Rating, which evolved into today s Financial Strength Ratings. From 1935 through 1975, A.M. Best did not assign letter ratings to life/health companies. Instead they had comments. In order to complete this rating history project, a translation was devised to convert those comments to equivalent letter ratings. For example, from 1935 to 195, More than Ample was found to be equivalent to today s A rating. Longevity The nine insurers profiled here offer, in microcosm, a glimpse into how the economic cycles have affected the insurance industry. They exemplify the grass-roots growth of the industry to protect assets. Take, for example, the small group of people who gathered in Lititz, Pa., on May 1, 1888, to organize a way to safeguard their assets from fire. Today Lititz Mutual still is owned by its policyholders. American Automobile Insurance Co., launched locally in 191, is now part of a global insurance giant. Established in 186, Guardian Life Insurance Co. is one of the nation s largest mutuals. Country Mutual Insurance Co. is the oldest active farm bureau insurance company. Two of the insurers profiled have an uncommon business model. They operate under the perpetual policy model: taxadvantaged homeowners insurance policies, established with an initial lump sum paid upfront, that do not expire. 8 Best s Review july 9

4 Best s Ratings This Rating History Project is based on Best s Financial Strength Ratings. A Best s Financial Strength Rating is an independent opinion, based on a comprehensive quantitative and qualitative evaluation of a company s balance sheet strength, operating performance and business profile that assesses a company s ability to meet its obligations to policyholders. A.M. Best Company was founded in 1899 with the purpose of performing a constructive and objective role in the insurance industry toward the prevention and detection of insurer insolvency. This mission led to the development of Best s Ratings, which are now recognized worldwide as the benchmark for assessing insurers financial strength. Best s rating opinions reflect an in-depth understanding of business fundamentals garnered from more than 1 years of focusing solely on the insurance industry. This is one reason why insurance industry professionals have consistently ranked Best s Ratings No. 1 in confidence, usefulness and understanding. A Best s Rating is an independent third-party evaluation that subjects all insurers to the same rigorous criteria, providing a valuable benchmark for comparing insurers, regardless of their country of domicile. Such a benchmark is increasingly important to an international market that looks for a strong indication of stability in the face of widespread deregulation, mergers, acquisitions and other dynamic factors. 5 Property/Casualty Insurers Rated A or Higher for 5 Years A or Higher Current Company Name AMB# Since Rating Alfa Mutual Insurance Co A+ American Agricultural Ins. Co A American Cas. Co. Reading, PA A American Family Mutual Ins. Co A American Home Assurance Co A American Intern Pacific Ins. Co A American Security Insurance Co A American States Ins. Co. of TX A Associated Indemnity Corp A Barnstable County Mut Ins. Co A Bay State Insurance Co A+ Bear River Mutual Ins. Co A Cambridge Mutual Fire Ins. Co A+ Church Mutual Insurance Co A+ Cincinnati Insurance Co A+ Commerce and Industry Ins. Co A Continental Western Ins Co A+ Cumberland Mutual Fire Ins. Co A Economy Fire & Casualty Co A Erie Insurance Exchange A+ Farm Bureau Mutual Ins. Co A Farm Bureau Mutual Ins. of ID A+ First National Ins. Co. of Amer A Generali USB A+ Great American Assurance Co A Great American Insurance Co. NY A Illinois National Insurance Co A Kentucky Farm Bureau Mutual A+ Madison Mutual Ins. Co. (IL) A Merchants Bonding Co. (Mutual) A Midwestern Indemnity Co A Mountain West Farm Bureau Mut A+ National Fire & Marine Ins. Co A++ National Indemnity Co A++ National Surety Corp A Nationwide Mutual Fire Ins. Co A+ Netherlands Insurance Co A New York Central Mutual Fire A+ North Star Mutual Ins. Co A+ Ohio Farmers Insurance Co A Otsego Mutual Fire Ins. Co A+ Pennsylvania General Ins. Co A Safeco Ins. Co of America A State Auto Prop. & Cas. Ins. Co A+ Continued on page 3 Best s Review july 9 9

5 5 Property/Casualty Insurers Rated A or Higher for 5 Years Continued from page 9 A or Higher Current Company Name AMB# Since Rating State Farm Fire & Casualty Co A+ Swiss Reinsurance America Corp A Tennessee Farmers Mutual Ins A++ Transportation Insurance Co A Union Insurance Co A+ United States Ins. Co A++ Universal Surety Co A Universal Underwriters Ins. Co A Valley Forge Insurance Co A Vigilant Insurance Co A++ Western Surety Co A Source: A.M. Best Data. Ratings as of May 18, 9 5 Life/Health Insurers Rated A or Higher for 5 Years A or Higher Current Company Name AMB# Since Rating American General Lf. & Accident A American National Ins. Co A+ American United Life Ins. Co A Canada Life Assurance Co A+ Columbus Life Insurance Co A++ Great-West Life Assurance Co A+ Guardian Life Ins. Co. of Amer A++ Hartford Life Ins. Co A Kansas City Life Ins. Co A Liberty Life Insurance Co A Liberty National Life Ins. Co A+ Lincoln National Life Ins. Co A+ Manufacturers Life Ins. Co A++ Massachusetts Mutual Life Ins A++ Minnesota Life Ins. Co A+ Nationwide Life Ins. Co A+ Pacific Life Insurance Co A+ Protective Life Ins. Co A+ ReliaStar Life Insurance Co A State Farm Life Ins. Co A++ Sun Life Assur. Co. of Canada A+ United of Omaha Life Ins. Co A+ United States Life Ins. of NY A Source: A.M. Best Data. Ratings as of May 18, 9 Anniversary BestMark AM. Best Co. has launched a program to recognize insurance companies that have maintained a financial strength rating of A or higher for at least 5 years. The Anniversary BestMark program consists of a special icon distinct from the standard BestMark that incorporates the company s name and acknowledges the year a company first achieved the financial strength rating of A. Print and Internet-compatible versions of the icon will be supplied. Eligible companies can use this icon in a manner similar to the current BestMark for example, on their Web sites, in print and online advertising, and on the cover of Best s Rating Report reprints. Eligible companies can request an Anniversary BestMark via to bestmarkinsurers@ambest. com or phone call to A.M. Best, (98) 39-, Ext Financial Strength Rating A M BEST A or Higher Since 1976 YOUR COMPANY NAME HERE Watch a video about this article on bestreview.com/videos Company profiles reported by Editorial Assistant Kate Fry. 3 Best s Review july 9

6 Horseless Carriage to Hybrids American Automobile Insurance Co. has been rated A or higher by A.M. Best since American Automobile Insurance Co., a Fireman s Fund Insurance Co. subsidiary, launched on Jan. 1, 191. American Auto is one of a nine-member intercompany pool with five reinsured subsidiaries. Fireman s Fund is a national, multiline proper ty/ casualty insurer, conducting underwriting operations through four business units, including commercial and specialty. Fireman s Fund is owned by Allianz Group of Munich, Germany, a leading global provider of insurance, asset management and banking. Over the years, Fireman s Fund has demonstrated endurance in the face of catastrophe. Following the Great Chicago Fire in 1871, many insurers went bankrupt while Fireman s Fund paid all claims even though the company s losses CA OR WA NV ID AZ MT WY ND SD NE TX exceeded its assets. Agents and adjusters with Fireman s Fund were among the first civilians to enter the areas devastated by hurricanes Katrina, Rita and Wilma to provide their policyholders with funds to get back on their feet. The company was bold in providing coverage for the new horseless carriages, and issued the first airplane insurance policy. To help businesses go green, the company offers new vehicle replacement cost coverage with the option to upgrade to a hybrid model. This option helps to reduce energy costs. Fireman s Fund maintains a strong West Coast presence, with roughly one quarter of the group s direct business generated in California. Fireman s Fund personal lines business also produces one quarter of gross premium volume. Profit Centers The five states where Fireman s Fund generates the most premium. AK UT NM CO HI KS OK MN IA MO AR LA WI IL MS IN TN AL MI KY OH GA WV NC SC FL PA VA NY VT NH NJ DE MD ME MA CT RI American Automobile Insurance Co. (AMB # 176) Group Membership: Fireman s Fund Insurance Companies (AMB # 3) Chief Executive: Michael LaRocco Novato, Calif. Michael LaRocco 1933: $8.561 Million : $13.9 Billion* *Note: assets include parent company Principal Lines of Business Inland Marine Homeowners 1, 8 6 All Other Allied Lines Comm. M.P. Other Combined Ratio Less Than Note: After Policyholder Dividends Group Results 3 Best s Review july 9

7 Engine for Expansion American States Insurance Co. has been rated A or higher by A.M. Best since 193. CA OR WA NV ID AZ MT WY ND SD NE TX American States Insurance Co. was incorporated in Indiana on July 15, 199, and began business the same day. The company's present name was adopted in 193. In October 1997, American States was acquired by Safeco Corp., which itself was acquired by Liberty Mutual Insurance Cos. in September. Liberty Mutual has a diversified franchise and maintains an excellent reputation in service and strong client relationships. It offers extensive unbundled service capabilities, risk management services and strategic alliances with managed care networks, which gives Liberty Mutual a significant competitive advantage and a superior market profile. The Massachusetts Employees Insurance Association began operations in 191. MEIA later changed its name to Liberty Mutual in As a mutual company, MEIA was owned by policyholders, not stockholders. As such, the mutual company worked on behalf of its policyholders, a tradition that continues today. Liberty Mutual is engaged in underwriting all lines of commercial and personal business. The group is the nation s third-largest commercial lines writer and the seventh-largest personal lines writer based on direct premiums written. Personal lines business ranks high among the group s top performing underwriting segments. The group is focusing on new markets in countries with an emerging middle class. The business is split approximately 6% commercial and % personal lines. The group ranks as the fifth-largest property/casualty organization in the United States, based on direct premiums written. In addition to personal and commercial markets, the group operates in agency and international markets. In early 9 Liberty Mutual said it would sell its middle-market direct distribution business and its Wausau agency brand to focus on selling to this market only through independent agents and brokers. Profit Centers The five states where Liberty Mutual generates the most premium. AK UT NM CO HI KS OK MN IA MO AR LA WI IL MS IN TN AL MI KY OH GA WV NC SC FL PA VA NY VT NH NJ DE MD ME MA CT RI American States Insurance Co. (AMB # 87) Group Membership: Liberty Mutual Insurance Companies (AMB # 6) President: Edmund F. Kelly Indianapolis, Ind. 193: $638, : $.7 Billion 8 6 Principal Lines of Business Auto Phys. Damage All Other Comm. M.P. Workers Comp PP Auto Combined Ratio Homeowners Less Than Note: After Policyholder Dividends Group Results Edmund F. Kelly Best s Review july 9 33

8 Homeownership Is the Policy The Baltimore Equitable Society has been rated A or higher by A.M. Best since The Baltimore Equitable Society, one of the city s oldest corporations, has maintained a long-standing marketing presence in Maryland. The Society was founded in 179. Throughout its history, the company has maintained a strong tradition of prompt and full payment to its policyholders. On Dec., 1796, the Society sustained its first loss when a fire consumed two brick houses at Light and Baltimore streets. The blaze also destroyed a number of other businesses, homes and a church. At the turn of the century, the city of Baltimore experienced another tragedy. On Feb. 7, 19, a wholesale dry goods house caught fire in the heart of the city s business district. The Great Baltimore Fire destroyed 15 acres and,5 businesses and total damages reached $15 million. The fire affected 55 policyholders and despite the company s significant losses, The Society ensured that all policyholders were promptly paid in full. The Society s expertise as a specialty writer of perpetual fire and homeowners policies, as well as its knowledge of the Baltimore market, has played a crucial role in its success. Baltimore Equitable is one of several insurance companies in the United States that operates under the perpetual policy deposit method. As a writer of perpetual insurance policies, Baltimore Equitable collects an initial deposit for each policy in lieu of premium. The company s large investment portfolio generates income, as well as realized capital gains, to pay claims and cover operating expenses. The company writes only homeowners and broad-form fire policies in Maryland and Pennsylvania on a direct basis. The Society s strong franchise and unique product have contributed to favorable growth and business persistence in its current markets. These factors have also provided an opportunity to diversify its product into Pennsylvania. Baltimore Equitable Insurance Baltimore Equitable Society (AMB # 35) President: Timothy J. Swartz Baltimore, Md. 1933: $.11 Million : $18.59 Million Policyholders Surplus Company Results Timothy J. Swartz Invested Assets 5 3 Bond Portfolio Composition Annual Statement (%) Bonds (Schedule D) Common Stocks Cash, Cash Equivalents & Short-Term Investments % of Total Class 1-(%)* Government State, Terr & Poss Corporate *Percentage of bonds invested in the two highest quality categories Yield on Invested Assets Best s Review july 9

9 Farms Yield Long-Term Gains Country Mutual Insurance Co. has been rated A or higher by A.M. Best since Since 195, Country Mutual Insurance Co. has specialized in farm insurance and built upon its strong agricultural roots to become one of the leading insurers of farms and ranches in Alaska, Illinois, Nevada, Oregon and Washington. A subsidiary of Country Financial, which consists of nine companies, Country Mutual leads the group as the oldest active farm bureau insurance company in the United States. Country Financial began as a fire and lightning insurance company in 195. A year later, the company began to offer crop, hail and farm equipment insurance, and over time offered auto and life insurance as well. Today it is primarily focused on private-passenger auto and homeowner lines, and farm and small main street commercial insurance products, including agricultural coverage in Farm Bureau-sponsored states. Recently, Country Financial has been expanding its portfolio of multiline personal policies. Geographic and product expansions have resulted from the affiliations and acquisitions, and management has a proven track record of producing profitable results in years subsequent to the mergers. Country Financial is predominantly a personal lines writer, generating approximately half of its total direct premium revenue in Illinois, with the balance written in 35 additional states. Country Financial benefits from an effective distribution network, customer loyalty, broad technology platform and local market knowledge. In addition, the group focuses on cross-selling of products to further strengthen its high business retention ratio. Such attributes have made it one of the largest U.S. property/ casualty groups. FINANCIAL Country Mutual Insurance Co. (AMB # 9) Group Membership: Country Financial (AMB # 3) Chief Executive: John Blackburn Bloomington, Ill. 1931: $616, : $3.37 Billion Principal Lines of Business Allied Lines Comm. M.P. Group Results All Other Auto Phys. Damage Homeowners John Blackburn PP Auto Profit Centers The five states where Country Financial generates the most premium. CA OR WA AK NV ID AZ UT MT WY NM CO HI ND SD NE TX KS OK MN IA MO AR LA WI IL MS IN TN AL MI KY OH GA WV NC SC FL PA VA NY VT NH NJ DE MD ME MA CT RI Combined Ratio Less Than Note: After Policyholder Dividends 36 Best s Review july 9

10 All the Right Moves Guardian Life Insurance Company of America has been rated A or higher by A.M. Best Co. since 197. The Guardian Life Insurance Company of America, a subsidiary of Guardian Life Group, is one of the largest U.S. mutual life insurance companies. It was founded by Hugo Wesendonck in 186 in New York and called the Germania Life Insurance Company of New York. By 1868, Germania was the first U.S. insurance company to establish an agency in Europe. Almost half of Germania s business was outside North America by the early 19s, until the pressures of World War I forced the company to stop writing business in Europe. In 1917, the company changed its name to Guardian Life Insurance Company of America. Today the company is licensed in all states and the District of Columbia. Guardian Life provides a full range of insurance, investment, securities brokerage and other related products and services through a number of affiliates. Its strategy for growth focuses on expanding and improving its career agency system while growing supplementary independent agent and broker channels to distribute its individual insurance products. A.M. Best upgraded Guardian s financial strength ratings to A++ from A+ in late. The ratings reflect Guardian s superior capitalization, maintenance of positive earnings trends and the organization s successful execution of several key strategic initiatives over the past several years. The upgrade also considers the group s well-diversified product portfolio, underpinned by Our financial strength provides PEACE OF MIND Primary Lines of Business (Company) 3,5 3,,5 Ordinary Life Group Life strong positions in its core life, annuity, individual disability, dental and employee benefits markets. In, Guardian Life introduced The Living Balance Sheet, a Webbased tool that allows customers to consolidate their financial information. This improves the agent s ability to provide financial solutions to customers. Group Accident & Health ANNUAL REPORT Guardian Life Insurance Company of America (AMB # 658) Group Membership: Guardian Life Group (AMB # 389) Chief Executive: Dennis J. Manning New York, N.Y. 197: $6, : $8.97 Billion Total Capital & Surplus Net Operating Gain To Total Revenue (%) 5 3 Company Results Dennis J. Manning, 15 Total Return (%) Best s Review july 9 37

11 Insurer Grew From Grass Roots Lititz Mutual has been rated A or higher by A.M. Best since 193. On May 1, 1888, 5 citizens from Lancaster County in Pennsylvania gathered in Lititz to organize the Agricultural Mutual Fire Company of Lancaster County. Dedicated to their Pennsylvania Dutch heritage, these citizens adopted by-laws on the principles of thrift, integrity and full measure for value received. The Lititz Mutual Insurance Co., as it is known today, is a subsidiary of Lititz Mutual Insurance Group. The group is led by Lititz Mutual Insurance Co., and includes its three reinsured affiliates. The operations of the companies are conducted in nine states located Henry R. Gibbel primarily along the East Coast of the United States. The company s largest state of operation is Pennsylvania with 38% of total direct writings. Its underwriting operations are centered primarily on homeowners coverage, which comprises approximately 7% of net premium volume. In terms of policyholders surplus, the company is among the largest mutual insurers in America. Lititz Mutual is proud of its agricultural background. With a solid foundation of the principles adopted by its founders, the company has built one of the leading mutual insurance companies in Pennsylvania. Lititz Mutual Insurance Co. (AMB # 558) Group Membership: Lititz Mutual Insurance Group (AMB # 18518) Chief Executive: Henry H. Gibbel President and COO: Henry R. Gibbel Lititz, Pa. 193: $7, : $185.5 Million Principal Lines of Business Allied Lines Farmowners Fire Group Results Comm M.P. All Other Homeowners Henry H. Gibbel Profit Centers The five states where Lititz Mutual generates the most premium. CA OR WA AK NV ID AZ UT MT WY NM CO HI ND SD NE TX KS OK MN IA MO AR LA LA WI IL MS IN TN AL MI KY OH GA WV NC SC FL PA VA NY VT NH NJ DE MD ME MA CT RI Combined Ratio 1 1 Less Than Note: After Policyholder Dividends 38 Best s Review july 9

12 Finding a Strong Niche Mutual Assurance Society of Virginia has been rated A or higher by A.M. Best since For the Mutual Assurance Society of Virginia, the fundamental principle of mutual assurance and mutual risk that originated in the Society s charter remains true today. As the oldest fire insurance company and the oldest continuously operated corporation in Virginia, Mutual Assurance was founded on Dec., 179, by an act of incorporation from the Virginia Legislature. The company began operations as a fire underwriter in Richmond and the surrounding area in 1795 under the name The Mutual Assurance Society, Against Fire on Buildings, of the State of Virginia. Since inception, the company has written single-premium assessable perpetual term policies. The company confined its operations to fire insurance until May 17, 1955, when the charter was modified to include the writing of miscellaneous property and water damage coverage. The company amended its charter again in June of 1965 to further expand its permitted activities to include the writing of multiple-line coverage when issued as a supplemental or comprehensive contract in connection with a fire insurance policy. The company maintains a long-standing market presence in Richmond and its surrounding areas as a specialty writer of perpetual-type fire and homeowners insurance. A variety of personal lines coverages are written throughout the state on a single premium with a continuous policy. Underwriting emphasis is placed on homeowners policies for preferred risks. Strong branding has enabled Mutual Assurance to achieve favorable growth and business persistence in established markets. Mutual Assurance Society of Virginia (AMB # 36) Chief Executive: L. Gerald Roach Richmond, Va. 1933: $.6 Million : $171 Million Principal Lines of Business Fire Rein-NPA Company Results Homeowners L. Gerald Roach Allied Lines Other O Policyholders Surplus Yield on Invested Assets (%) Combined Ratio Note: After Policyholder Dividends Best s Review july 9

13 Regional Specialists Selective Insurance Company of America has been rated A or higher by A.M. Best since 193. As the leading member of Selective Insurance Group, Selective Insurance Company of America contributes to the group s strong reputation and ranking among the top 5 property/casualty organizations in the United States, based on net premiums written. In the 19s, Daniel L.B. Smith, the founder of Selective, operated a small chain of general stores in Sussex County, N.J. He lent a horse and carriage to one of his friends, a banker and insurance agent. The horse ran away and wrecked the carriage but Smith refused to take any payment. When the friend moved away, he gave Smith some policy declarations for farms and homes he had insured through his agency, which then became the D.L.B. Smith Agency. Over time, Smith became well-known as a man who cared about his clients and kept his word. His commitment to providing the best service and products has CA OR WA AK NV ID AZ UT MT WY NM CO HI ND SD NE TX been the foundation of Selective s strategy. As a regional multiline property/ casualty organization, Selective has dedicated service capabilities, and offers a broad range of insurance products and services. Selective s successful fieldbased operating model and its technology infrastructure gives the group the ability to leverage its strong agency relationships. It has sustained strong market penetration and maintained high policyholder-retention rates. Selective primarily writes two types of business. Commercial lines represent approximately 87% of net premiums written, while personal lines represent approximately 13%. The group sells its property/casualty products and services in states, with New Jersey accounting for nearly 3% of the group s net premiums at year-end. Pennsylvania, New York, Maryland and Virginia together represent more than 65% of the group s writings. SELECTIVE Profit Centers The five states where Selective Insurance Group generates the most premium. KS OK MN IA MO AR LA WI IL MS IN TN AL MI KY OH GA WV NC SC FL PA VA NY VT NH NJ DE MD ME MA CT RI Selective Insurance Company of America (AMB # 86) Group Membership: Selective Insurance Group (AMB # 396) Chief Executive: Gregory E. Murphy Branchville, N.J. 193: $37, : $. Billion Principal Lines of Business Auto Phys. Damage PP Auto All Other Comm. Auto Other Combined Ratio Workers Comp Less Than Note: After Policyholder Dividends Group Results Gregory E. Murphy Best s Review july 9 1

14 Survival Tactics Westfield Insurance Co. has been rated A or higher by A.M. Best since 193. As a leading multiline property/casualty company of Westfield Group, Westfield Insurance Co. plays a major role in the group s ranking among the 1 largest writers in Ohio. The group writes business in the Midwest and South Atlantic regions of the United States, offering a broad range of insurance and related products to individuals and businesses. As one of the top writers of farm business in the United States, it comes as no surprise that Westfield was founded by a small group of Ohio farmers who joined together to form the Ohio Farmers Insurance Co. in order to protect their property. In the late 18s, the company was in search of a logo and finally chose an image, provided by a local printer, of a farmer sitting on a fence. The image, which became CA OR WA NV ID AZ MT WY ND SD NE TX known as The Old Man on the Fence, epitomized the company s philosophy: honest, independent and hard-working. Westfield is a provider of commercial and personal insurance in 18 states, with the breakdown of the business approximately 35% personal lines and 65% commercial lines. In addition, Westfield provides surety services to customers. The group is the largest writer of contract performance bonds in Ohio. The group has significantly expanded its market outside of Ohio and into nearby Midwestern states. In, Westfield acquired the Old Guard group of insurance companies, located in Lancaster, Pa., to diversify geographic risk. The group holds $3.6 billion in consolidated assets and $1.7 billion in written premium. Profit Centers The five states where Westfield Group generates the most premium. AK UT NM CO HI KS OK MN IA MO AR LA WI IL MS IN TN AL MI KY OH GA WV NC SC FL PA VA NY VT NH NJ DE MD ME MA CT RI Westfield Insurance Co. (AMB # 38) Group Membership: Westfield Group (AMB # 73) Chief Executive: Robert J. Joyce Westfield Center, Ohio 193: $819, : $.1 Billion 3 1 Principal Lines of Business All Other Homeowners Allied Lines Auto Phys. Damage Comm. M.P. Combined Ratio PP Auto Less Than Note: After Policyholder Dividends Group Results Robert J. Joyce Best s Review july 9