OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” from “bbb+” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Affinity Mutual Insurance Company (AMIC) (Lima, OH). The outlook of the Long-Term ICR has been revised to stable from negative, while the FSR outlook remains stable.
The ratings reflect AMIC’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.
The rating actions reflect the volatility in AMIC’s underwriting and operating performance over the past five years, most significantly in 2012, 2014, and 2015. The company’s underwriting results were impacted by weather-related events and fire losses, coupled with a historically elevated underwriting expense structure. The rating actions also reflect AMIC’s risk-adjusted capitalization being at the strongest level, low underwriting leverage and strong balance sheet liquidity. These positive rating attributes are offset somewhat by AMIC’s exposure to weather-related events due to geographic concentration of risk, as well as high product risk of the business it typically writes.
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