Grinnell Mutual Reinsurance has filed a proposal with Iowa regulators to establish a mutual insurance holding company, seeking to access capital markets and improve its financial and operational flexibility.
The reorganization plan, outlined in documents filed with the Iowa Insurance Division, would create three separate entities: Grinnell Mutual Holding Co, Grinnell Holdings Inc as an intermediate stock holding company, and Grinnell Mutual Reinsurance Co SI, which would convert to a stock insurance company.
In the first half of 2024, Grinnell Mutual Group reported a net income of $87.4 million, a reversal from a $79.9 million net loss in the same period of 2023. Policyholders’ surplus increased to $628.1 million from $610 million over the previous year. The company’s total cash and invested assets rose to $1.31 billion from $1.20 billion in the first half of 2023.
The company’s current operating performance has been assessed as adequate, with five-year average combined and operating ratios exceeding composite measures. However, a negative outlook was assigned due to a continued decline in key operating metrics in the first half of 2023, as indicated by AM Best.
Grinnell Mutual Group’s portfolio is evenly divided across personal lines, commercial lines, and reinsurance business. The report noted that the company’s exposure to property lines has made it susceptible to weather-related losses, with increasing frequency and severity in weather events affecting results from 2019 through 2023.
If approved, Grinnell Mutual Holding would be overseen by a board of directors elected by Grinnell policyholders, who would hold membership rights in the holding company. The structure would position Grinnell Mutual Reinsurance stock under Grinnell Holdings, which would, in turn, be owned by Grinnell Mutual Holding.
As part of this restructuring, Grinnell plans to issue a 100% stock dividend to Grinnell Holdings, a move that requires the approval of the Iowa Insurance Commissioner. According to Grinnell’s filing, the company does not intend to issue stock publicly currently.
Existing policyholders would remain covered under current policies and become members of Grinnell Mutual Holdings. Grinnell’s current board members and officers would retain their positions across the new corporate entities, according to the company’s reorganization proposal submitted by CEO Jeff Menary and president Dave Wingert.
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