OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to positive from stable and affirmed the financial strength rating of B+ (Good) and the issuer credit ratings of “bbb-” for members of the Wisconsin Reinsurance Group (WRG). The group comprises Wisconsin Reinsurance Corporation and its wholly owned subsidiary, 1st Auto & Casualty Insurance Company. All companies are domiciled in Madison, WI.
The ratings and outlooks reflect WRG’s increased risk-adjusted capitalization, strong pre-tax operating performance, reduced net underwriting leverage and long-standing relationships with township mutual clients. Strong overall earnings reflect underwriting profitability over the past three years buttressed by net investment income and realized and unrealized capital gains. The positive outlooks reflect this return to underwriting profitability, strengthened risk-adjusted capitalization and increased policyholders’ surplus in four of the past five years.
Partially offsetting these positive rating factors are the group’s concentration of mutual clients located in Wisconsin and drag to overall operating profitability from its affiliate, 1st Auto & Casualty Insurance Company, which has reported operating losses over the latest five-year period. In addition, the group’s geographic concentration exposes the assumed business from its reinsured clients to significant weather-related loss events and the potential for adverse judicial, legislative and regulatory actions. However, mitigating this risk is the group’s comprehensive reinsurance program that provides protection for frequent and severe weather-related events, as reflected in 2014 as the group sustained its largest single event in history and was still able to report an underwriting profit and surplus appreciation. Further, over the past five years, management has continued to increase its spread of risk by contracting with mutuals in four other states.
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