OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “bbb” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Bremen Farmers Mutual Insurance Company (Bremen) (Bremen, KS). The outlook of the Long-Term ICR has been revised to stable from positive while the outlook of the FSR remains stable.
The ratings reflect Bremen’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The upgrade of Bremen’s Long-Term ICR reflects the improvement in its balance sheet strength over the past five years. Bremen has reported favorable operating results over the most recent five years, driven by rate increases and favorable weather activity, resulting in positive underwriting gains and net income. These positive earnings have led to surplus growth, which has reduced leverage measures and improved overall risk-adjusted capitalization.
Bremen’s very strong balance sheet reflects its conservative investment portfolio, favorable reserve development and limited scale of operations. The adequate operating performance reflects the company’s improved underwriting profitability over the most recent five years. Bremen’s five-year average combined ratio has outperformed the personal property composite average. The limited business profile is a reflection of Bremen’s geographic and product concentrations as a personal property writer in Kansas. ERM is appropriate for Bremen’s size and scope. Bremen has identified its key risks with its main focus being on its exposure concentration. Bremen analyzes these concentrations and performs deterministic stress testing, which it utilizes to limit or reduce business in high concentration areas. Bremen also maintains a comprehensive reinsurance program that protects surplus from frequent and severe weather events.
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