News
November 5, 2009
I wanted to let you know of some news that was released today about our company. A few weeks ago we provided A.M. Best with an update on our business performance. We now have confirmation that they have adjusted our financial strength rating from a B to a C+, with a negative outlook.
While we were disappointed to learn this news, we were not surprised by the rating action given our financial challenges. Year-to-date through September our surplus and reserves stand at $99 million.
As I explained in my October 27 letter to you, we need to improve our premium-to-surplus ratio and we need to do this quickly. This requires significant action on our part, and this work is already well underway. Among our actions to date, we have:
Stopped marketing in the Large Group segment and implemented rate adjustments for all large group customers
Implemented significant rate adjustments for both in-force and new Small Group business in Arizona, Illinois, Iowa, Missouri and Nebraska
Reduced administrative expenses, including about 12 percent of our workforce (45 positions)
In addition, in the coming weeks we will:
Eliminate advance commissions on Individual new business with application signature dates of December 1, 2009 or later
Stop paying new agent appointment fees, renewal fees and non-resident fees effective January 1, 2010
There’s no question that many of these actions will directly impact you and your business. And it’s entirely possible we may need to take additional steps as we work to improve our premium-to-surplus ratio. However, it’s important for you to know that we are committed to doing whatever it takes to return this company to profitability.
Our roots go back to 1938, and with the help of our dedicated employees and loyal partners like you, we have weathered significant challenges. While we expect this company will look different a year from now as we focus our resources on our core business, what will not change is our commitment to providing superior service to our agents and policyholders. We appreciate your support as we work to rebuild this company and will keep you informed of our progress.
Sincerely,
Michael Tobin
President and Chief Executive Officer