OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-“ of CAMICO Mutual Insurance Company (CAMICO) (San Mateo, CA).
The revised outlooks to positive reflect CAMICO’s consistent organic surplus growth in recent years, driven by improvement in underwriting performance due to corrective actions taken by management. The outlooks also reflect A.M. Best's expectations that the company will continue to demonstrate sustained improvement in operating results over the near term.
The Credit Ratings (ratings) reflect CAMICO’s solid risk-adjusted capitalization and expertise in the accounting professional liability market. In response to the poor performance in earlier years, the company shifted its focus toward smaller, less-risky firms in recent years. Additional corrective actions taken by management include base rate adjustments, changes to reinsurance coverage and a reduction in operating expenses.
These positive attributes are partially offset by volatility in CAMICO’s operating performance, adverse loss reserve development on prior accident years and the inherent market risks associated with being a monoline insurer. However, the impact of adverse development of legacy claims is expected to decline prospectively with just one remaining legacy claim currently open. In addition, CAMICO has had to contribute capital to its wholly owned subsidiary, CAMICO Services, Inc., to support its ongoing operations in recent years. Additional capital may be required if the agent remains unprofitable; however, expense reduction initiatives have been put into place to return the agency to profitability, which management expects to achieve in 2017.
Positive rating action may occur if the company shows sustained underwriting and overall operating performance improvement while maintaining strong risk-adjusted capitalization. Negative rating action could result if the company's underwriting and operating performance fall markedly short of A.M. Best's expectations. Negative rating action also could result if there was a material weakening of the company’s risk-adjusted capitalization.
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