A.M. Best Removes From Under Review With Negative Implications and Downgrades Issuer Credit Rating of Otsego Mutual Fire Insurance Company

OLDWICK, N.J.--()--A.M. Best has removed from under review with negative implications and downgraded the Long-Term Issuer Credit Rating to “aa-” from “aa” and affirmed the Financial Strength Rating of A+ (Superior) of Otsego Mutual Fire Insurance Company (Otsego) (Burlington Flats, NY). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings were placed under review with negative implications on Oct. 13, 2017, following the release of the updated Best’s Credit Rating Methodology (BCRM). The ratings have been removed from under review, as A.M. Best has completed its analysis of Otsego under the updated BCRM.

The ratings reflect Otsego’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its very strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

Otsego’s balance sheet strength is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), reflective of historically redundant calendar and accident year loss reserves, extremely conservative underwriting leverage, and a high quality investment portfolio. Surplus is bolstered year over year with operating earnings. However, the company has high reinsurance dependence, limited financial flexibility and limited scale. Otsego’s operating performance on a five- and ten-year average basis is very strong, and consistent with key operating metrics that generally experience low volatility and compare very favorably with peer averages. The company’s long-standing, regional niche market position in New York and strong management team are supportive of the neutral business profile assessment. Although the product is generally limited to homeowners products, the company’s loyal agency force and strict underwriting standards continue to produce exceptionally strong underwriting ratios. Otsego also benefits from appropriate ERM, including a comprehensive reinsurance program.

This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

A.M. Best
Kim Muccia, +1-908-439-2200, ext. 5731
Financial Analyst
kimberly.muccia@ambest.com
or
Brian O’Larte, +1-908-439-2200, ext. 5138
Director
brian.o'larte@ambest.com
or
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1-908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best
Kim Muccia, +1-908-439-2200, ext. 5731
Financial Analyst
kimberly.muccia@ambest.com
or
Brian O’Larte, +1-908-439-2200, ext. 5138
Director
brian.o'larte@ambest.com
or
Christopher Sharkey, +1-908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jim Peavy, +1-908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com