1271245--3/24/2009--FREMONT_MICHIGAN_INSURACORP

related topics

{loss, insurance, financial}

{capital, credit, financial}

{condition, economic, financial}

{operation, natural, condition}

{regulation, government, change}

{cost, regulation, environmental}

{product, liability, claim}

{provision, law, control}

{loan, real, estate}

{competitive, industry, competition}

{investment, property, distribution}

{regulation, change, law}

Our financial results could be affected by the cyclical patterns of the soft and hard market in the property and casualty industry. Because we concentrate all of our business in Michigan, its weather will affect our results. Catastrophe and natural peril losses may hurt our financial condition. If we underestimated the amount of our required loss reserves, our results may suffer. We face strong competition from large companies, which may reduce our earnings and profits. Our reliance on independent insurance agencies to sell our products as well as their ability to sell products of our competitors could adversely affect the sale of our products. A downgrade in our A.M. Best rating could hurt our premium volume. If we are unable to obtain adequate reinsurance coverage at reasonable rates in the future, we may be unable to manage our underwriting risks and operate our business profitably. If our reinsurers do not fulfill their financial obligations to us it may jeopardize our earnings and financial condition. If we do not have adequate reinsurance coverage, our earnings and financial condition would be in jeopardy. Changes in prevailing interest rates may reduce our revenues, cash flows and shareholders equity. We could be forced to sell investments to meet our liquidity requirements. Declining debt and equity markets could adversely affect our investment portfolio. The Sarbanes-Oxley Act of 2002 may have a material adverse effect on our business. Regulatory changes could adversely affect our business. Regulators may limit our use of credit-based insurance scoring, adversely affecting our ability to effectively price our products. Assessments and other surcharges for guaranty funds, second-injury funds and other mandatory pooling arrangements may reduce our profitability. Michigan s regulatory environment restricts our ability to exclude potentially unprofitable risks. Inflation could increase the cost of claims resolutions and hurt our profitability. Acts of terrorism may adversely impact our financial results. Federal regulation of insurers may have a material effect on our operations. The Gramm-Leach-Bliley Act of 1999 allows banks to affiliate with insurers, which may increase the number and financial strength of our competitors. Anti-takeover provisions in our articles of incorporation and bylaws may discourage takeover attempts and prevent or frustrate attempts to replace or remove our management, which could limit your opportunity to receive a high value for your stock if another company seeks to acquire us. The current financial crisis has resulted in unprecedented levels of market volatility. Governmental initiatives intended to alleviate the crisis that have been adopted may not be effective and, in any event, may be accompanied by other initiatives, including new capital requirements or other regulations, that could materially affect our results of operations, financial condition and liquidity in ways that we cannot predict. The markets in the United States and elsewhere have been experiencing extreme and unprecedented volatility and disruption. We are exposed to significant financial and capital markets risk, including changes in interest rates and equity prices which may adversely affect our results of operations, financial condition or liquidity. Losses due to defaults by others, including issuers of investment securities or reinsurance and derivative instrument counterparties, could adversely affect the value of our investments, results of operations, financial condition or cash flows. The amount of statutory capital that we have and the amount of statutory capital that we must hold to maintain our financial strength and credit ratings and meet other requirements can vary significantly from time to time and is sensitive to a number of factors outside of our control, including equity market and credit market conditions and changes in rating agency models. We may experience a downgrade in our financial strength or credit ratings, which may make our products less attractive, which would have an adverse effect on our business, results of operations, financial condition and liquidity.

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1271245--3/24/2009--FREMONT_MICHIGAN_INSURACORP_INC