OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of STICO Mutual Insurance Company, Risk Retention Group (STICO) (Burlington, VT).
These Credit Rating (ratings) reflect STICO’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.
The revised outlooks reflect the negative trend in operating performance due to competitive market conditions, weaker economies of scale and volatility in the energy sector over the last couple of years. Earnings prospects could face further headwinds as recent results continue to be challenged by declining net written premium due to policyholder consolidation and business closures, in addition to potential volatility in steel prices and loss costs related to steel tank replacement costs. The recent federal proposal for steel tariffs has increased prices and volatility, creating uncertainty in the energy market. To counter these inherent challenges, management has taken steps to diversify STICO’s revenue stream with related ancillary product offerings, but the company continues to face pressure from large multi-line insurers in its niche market segment.
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