OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of Everett Cash Mutual Insurance Company (Everett Cash Mutual) and 1st Choice Advantage Insurance Company, Inc., which are members of ECM Insurance Group (ECM). Concurrently, AM Best has revised the outlook to negative from stable for the Long-Term ICR and affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+”of Ever-Greene Mutual Insurance Company (Ever-Greene), an affiliate of Everett Cash Mutual. The outlook of the FSR remains stable. All companies are domiciled in Everett, PA.
The ratings of ECM reflect the group’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The negative outlooks reflect deterioration in underwriting performance in recent years that has resulted in both underwriting and operating metrics falling short of the composite average. Additionally, continued adverse reserve development may place pressure on the overall balance sheet strength.
ECM’s very strong balance sheet strength is supported by its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR) at the 99.6 VaR level, and high quality investment portfolio. These strengths are offset partially by adverse loss reserve development experienced in recent years and modestly elevated premium and reserve leverage metrics relative to the personal property composite. ECM’s neutral business profile reflects its niche market focus on farm and agriculture business. Business is written in 10 states, with the largest being Pennsylvania. AM Best considers the company’s ERM as appropriate with tolerances established for quantifiable risks, while qualitative risks are evaluated on the likelihood and potential impact of occurrence.
The ratings of Ever-Greene reflect the company’s balance sheet strength, which AM Best categorizes as strong, as well as its strong operating performance, very limited business profile and appropriate ERM.
The negative outlook on Ever-Greene’s Long-Term ICR reflects significant deterioration in operating performance since 2018 driven by underwriting losses in business assumed from ECM. The company’s balance sheet strength is supported by the strongest level of risk-adjusted capitalization as measured by BCAR at the 99.6 VaR level, somewhat offset by its limited scale and financial flexibility. Ever-Greene’s very limited business profile reflects its status as a reinsurer of commercial fire and inland marine business assumed from Everett Cash Mutual. The company’s ERM is integrated into the risk management structure of ECM. The ratings of Ever-Greene are enhanced by its strategic role as a tax-exempt entity within the ECM organization.
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