Stonewood Insurance :: A.M. Best Assigns Rating To Stonewood Insurance Company




	For More Informaton: Ken Mitchell 919-882-3500 kmitchell@stonewoodins.com A.M. Best Assigns Rating To Stonewood Insurance Company May 3, 2004, Raleigh, NC – A.M. Best Company has assigned an initial financial strength rating of A- (Excellent) to Stonewood Insurance Company. The company is an insurance subsidiary of James River Group, Inc., a Delaware holding company, and was licensed in November 2003 to provide workers’ compensation insurance for the residential construction industry in North Carolina. A.M. Best states, “The initial rating of this company is based on the strong track record of its management team in producing profitable results, its sound business plan to capitalize on opportunities to provide workers' compensation insurance within the same residential construction market in North Carolina where management has already exhibited its expertise, the benefits derived from the company's reinsurance pooling arrangement with an affiliated carrier and its solid capital base. Partially offsetting these strengths are the many challenges associated with a start-up operation and the group's aggressive growth plans and the company's limited product and geographic spread of risk. “Stonewood Insurance Company is led by C. Kenneth Mitchell who, through March 2003, was the President and CEO of Builders Mutual Insurance Company. Mr. Mitchell's experience in the homebuilding market in North Carolina, specifically in helping meet the workers' compensation insurance needs for these entities, spans more than two decades. Other Stonewood management team members were integral in helping Mr. Mitchell during his tenure running the North Carolina Home Builders Self Insurers Fund (NCHBSIF) beginning in 1984 and subsequent funds conversion into a mutual insurance company in 1998 that carried an "Excellent" financial strength rating from A.M. Best. The team demonstrated the ability to successfully service the chosen niche market, producing operating return and profitability results that far exceeded those posted by the workers' compensation composite group. The detailed strategies incorporated in Stonewood's operating plan have therefore, already proven to be successful. There should be ample opportunities in the current market because of fewer carriers servicing the company's target niche market. Stonewood will also benefit from support derived from its reinsurance pooling agreement with its affiliate company, James River Insurance Company (JRIC). JRIC currently carries an "Excellent" A.M. Best financial strength rating, derived in part from the financial flexibility offered by the strong group of investors that funded James River Group, Inc., which owns both JRIC and Stonewood. Those investors have explicitly expressed the desire to invest additional capital should it be needed to support the business. The financial flexibility derived from being part of James River Group, Inc., combined with the company's sound operating plan over the first few years, leads A.M. Best to anticipate that capital strength will remain solid in support of the business plan. “The company faces the usual myriad of operational and business profile oriented challenges that start-up operations are typically faced with in striving to be an effective new entrant into an established marketplace. Existing relationships with key distribution partners combined with the vast experience of management with the prevailing issues should provide the company with an advantage in trying to become well entrenched in its early stages. The limited geographic scope in focusing only on North Carolina risks in addition to concentrating on a single line of business exposes the company to regulatory risks to a greater degree than a more diversified company would face. A.M. Best will closely monitor the company's underwriting leverage over the near-term to ensure that growth efforts do not strain the company's capital strength in addition to monitoring results to ensure that rating expectations are met or exceeded.” The capital adequacy, expectations of performance and business plan of Stonewood, including management experience, technology initiatives, agency support, underwriting expertise and reinsurance structure were reviewed by A.M. Best Company. “We are pleased that A.M. Best’s analysis of our company provided them with the comfort level to assign Stonewood with an ‘Excellent’ rating immediately following our first quarter of operation,” said Ken Mitchell, Stonewood President and Chief Executive Officer. About Stonewood Insurance Company Licensed in November 2003, Stonewood provides workers’ compensation insurance for homebuilders, including general contractors and related artisan contractors, operating within the state of North Carolina. Based in Raleigh, North Carolina, Stonewood Insurance Company is a wholly owned subsidiary of James River Group, Inc. For more information on Stonewood, please contact Ken Mitchell, 919-882-3500, kmitchell@stonewoodins.com.