OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has upgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a+” from “a” and affirmed the Financial Strength Rating (FSR) of A (Excellent) of Employers Mutual Casualty Company (EMCC) and its five property/casualty (P/C) subsidiaries (collectively referred to as EMC Insurance Companies), which operate under an inter-company pooling agreement led by EMCC. In addition, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” of EMCC’s separately rated, indirectly owned subsidiary, EMC Reinsurance Company (EMC Re). Furthermore, A.M. Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of EMC National Life Company (EMCNL). Concurrently, A.M. Best has upgraded the Long-Term ICR to “bbb+” from “bbb” of EMC Insurance Group Inc. (EMCI) [NAS:EMCI], a downstream holding company majority owned by EMCC. The outlook of these Credit Ratings (ratings) is stable. All of the EMC entities are domiciled in Des Moines, IA, except for Dakota Fire Insurance Company, which is domiciled in Bismarck, ND. (See below for a detailed listing of the companies.)
The ratings of EMC Insurance Companies reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The Long-Term ICR upgrades are based on the group’s sustained improvement in its overall operations, strong capital formation and its robust level of risk-adjusted capitalization, which also considers the group’s consistently favorable loss reserve development. The group has taken action in recent years to improve pricing and risk selection, claims management and reserving methodology. It has developed and implemented predictive modeling tools and sophisticated monitoring systems as part of its overall risk management program, which have resulted in an improved ability to differentiate and monitor risk concentrations and to quantify and track the quality of business over time. These tools are leveraged by the group’s extensive network of brand offices and supported by long-standing agency relationships. These enhancements also were designed to enable management to more effectively manage the group’s business through market cycles.
The ratings of EMC Re reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings also consider the support the company receives from EMCC. Offsetting rating factors are EMC Re’s significant dependence on EMCC; its exposure to natural catastrophe and weather-related events; and the competitive challenges in the reinsurance market, which have grown more competitive due to excess capacity and the infusion of capital from alternative markets.
The ratings of EMCNL reflects its balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate ERM. The ratings of EMCNL also reflect its strategic importance to its parent, EMCC, its diversified product profile of life, annuity and workplace products, strong risk-adjusted capitalization and positive but fluctuating earnings in recent years. Partially offsetting rating factors include a high percentage of interest-sensitive liabilities at minimum guaranteed crediting rates, challenges of building scale in its workplace business and having a significant percentage of annuity liabilities that lack surrender protection.
The ratings of EMCI recognize the capital strength of its P/C subsidiaries, the benefits derived from the intercompany pooling agreement with EMCC and the absence of any financial leverage with no existing debt outstanding.
The Long-Term ICRs have been upgraded to “a+” from “a” and the FSR of A (Excellent) has been affirmed, each with a stable outlook for EMCC and its following P/C subsidiaries. These companies are all part of an intercompany pooling agreement, whereby all premiums, losses and expenses are shared proportionally based on their stated pooling participation:
- Dakota Fire Insurance Company
- EMC Property & Casualty Company
- EMCASCO Insurance Company
- Illinois EMCASCO Insurance Company
- Union Insurance Company of Providence
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.
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