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Great Oaks Insurance Assigned 'Api' Rating by S&P

18 September 1998

Great Oaks Insurance Assigned 'Api' Rating by S&P

    NEW YORK--S&P's CreditWire 9/18/98--Standard & Poor's today assigned its single-'Api' insurer financial strength rating to Great Oaks Insurance Co.
    Great Oaks Insurance is licensed in four states. Its major line of business is auto insurance, and it is a member of Harleysville Group Inc., a network of regional insurers operating in the eastern and midwestern United States. The company commenced operations in 1994, and the principle state in which it operates is Ohio.
    The following factors were incorporated in the single-'Api' rating:

--   The company participates in an interaffiliate pool led by
     Harleysville Mutual Insurance Co.

--   Capital adequacy for the interaffiliate pool is extremely strong
     at 184.2% under Standard & Poor's risk-based model, and as such,
     is a definite strength for the rating.

--   The company gains financial flexibility from its relationship
     with Harleysville Group Inc.

--   Harleysville Group has significantly reduced its exposure to
     catastrophes and increased the geographic spread of its risks
     from 1995 to 1998.

--   Operating results for the interaffiliate pool, as measured by
     risk-adjusted and time-weighted average return on revenue, are
     good. However, the returns are less than that of most higher
     rated insurers.

    `Pi' ratings, denoted with a pi subscript, are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a pi subscript. Pi ratings are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a pi subscript are not subject to potential CreditWatch listings.
    Ratings with a pi subscript generally are not modified with 'plus' or 'minus' designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group, Standard & Poor's said.--CreditWire