OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Germania Farm Mutual Insurance Association and its subsidiaries (Germania Fire & Casualty Company, Germania Insurance Company, Germania Select Insurance Company). Collectively, these companies comprise Germania Mutual Group (Germania). Also, A.M. Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb” of Texas Heritage Insurance Company (Texas Heritage), a subsidiary of Germania Farm Mutual Insurance Association. The outlook of these Credit Ratings (ratings) is stable. Concurrently, A.M. Best has withdrawn the ratings of Texas Heritage as the company has requested to no longer participate in A.M. Best’s interactive rating process.
Additionally, A.M. Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” of Germania Life Insurance Company (Germania Life). The outlook of these ratings is stable. All companies are domiciled in Brenham, TX.
The ratings of Germania reflect the group’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The ratings of Texas Heritage reflect the company’s balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, limited business profile and appropriate ERM. The ratings also reflect the explicit financial and operational support from its parent, Germania Farm Mutual Insurance Association.
At year-end 2017, Texas Heritage completed transferring all of its business to Germania Farm Mutual Insurance Association. Currently, Texas Heritage maintains sufficient reserves and adequate policyholder surplus for any remaining run-off claims. In the near term, no new business is expected to be written in this company.
The rating affirmations of Germania recognize its very strong risk-adjusted capitalization, long-time experience and expertise in the Texas marketplace, and conservative investment philosophy, which continues to produce favorable net investment income and be the main driver of pre-tax operating gains and net income.
The revised outlooks for Germania reflect the improvement in the group’s operating results, which have shown reduced volatility despite frequent and severe weather-related events, particularly in 2016 and 2017. This improvement is in direct correlation with management’s aggressive corrective actions to improve operations through significant tightening of underwriting guidelines, de-emphasizing of unprofitable business, and rate increases across the state. Going forward, A.M. Best anticipates continued stability in operating results. However, as a single-state writer in Texas, a certain degree of variability is expected due to the group’s inherent exposure to frequent and severe weather-related events, as well as any judicial, economic or regulatory concerns that may arise.
The ratings of Germania Life reflect its role within the organization as the ordinary life insurance provider, and also reflect the company’s continued strong level of risk-adjusted capitalization. Offsetting factors include Germania Life’s modest operating profile along with its narrow business profile and recent history of weak, albeit improving operating performance.
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