OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” of McMillan-Warner Mutual Insurance Company (MWM) (Marshfield, WI).
The Credit Ratings (ratings) reflect MWM’s balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).
The negative outlooks reflect MWM’s continued volatility in underwriting performance, which has occasionally impacted growth in policyholders’ surplus. Recent management initiatives such as enhanced loss control efforts and tightened underwriting standards have improved underwriting results in typical years. However, years with more weather-related catastrophe events than expected continue to influence the company’s operating performance, creating pressure on the ERM building block assessment.
The strong balance sheet strength assessment is supported by risk-adjusted capitalization at the strongest level. Positive growth in policyholders’ surplus over the past five years has been partially offset by limited financial flexibility and scale of operations. The marginal operating performance assessment reflects operating results that are historically driven by persistent underwriting losses, somewhat offset by solid investment performance. MWM’s limited business profile assessment is driven largely by its geographic concentration in Wisconsin, which exposes results to frequent and severe weather-related events, as well as potential judicial, economic or regulatory challenges.
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