OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlook to positive from stable and affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit ratings (ICR) of “bbb+” of The Celina Mutual Insurance Company and its pooled affiliates, National Mutual Insurance Company and Miami Mutual Insurance Company. The pool, together with West Virginia Farmers Mutual Insurance Association (West Virginia Farmers) (Clarksburg, WV), is referred to as Celina Insurance Group (Celina). Concurrently, A.M. Best has upgraded the ICR to “bbb+” from “bbb” and affirmed the FSR of B++ (Good) of West Virginia Farmers. The outlook for both these ratings also has been revised to positive from stable. All pool member companies are domiciled in Celina, OH, unless otherwise specified.
The revised outlook reflects Celina’s recent trend of improved operating results along with its strengthened capital position. The recent improvement in underwriting was the result of a series of significant actions that included re-evaluating and improving Celina’s underwriting exposures in Tennessee and Iowa, exiting specific classes of business and territories that directly contributed to higher loss ratios and were not meeting management’s current and long-term profit expectations. In addition, Celina’s total returns were boosted by investment income and capital gains, which have historically been a consistent source of income. As a result, pre-tax operating results improved substantially while also adding significantly to surplus over the past five years.
The ICR upgrade and outlook revision of West Virginia Farmers recognizes the rating enhancement it receives due to its strategic importance and contribution to Celina’s operating results. West Virginia Farmers is under the same board of directors’ oversight, is overseen by Celina’s management team, and also receives operational and functional support as a member of Celina.
Partially offsetting these positive factors is Celina’s ongoing exposure to catastrophic weather events in the Midwest. However, management continues to emphasize its strict underwriting guidelines, which have proven effective over the past two years while continuing to take numerous additional corrective actions to safeguard against accumulated loss events due to weather. Additional negative rating factors include its elevated underwriting expenses that are being addressed and narrow personal lines product offerings that are currently concentrated in several Midwestern states.
Positive rating actions may occur following a sustained improvement in Celina’s operating performance and an increase in its risk-adjusted capitalization. Negative rating actions could occur if there were a sudden and unexpected material decrease in capitalization or if an unfavorable earnings trend or operating performance were to be reported.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Catastrophe Analysis in A.M. Best Ratings
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.
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