AM Best Revises Outlooks to Negative for Members of Barnstable Group

OLDWICK, N.J.--(BUSINESS WIRE)--AM 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” for the members of Barnstable Group (Barnstable): Barnstable County Mutual Insurance Company and its wholly owned subsidiary, Barnstable County Insurance Company. Both companies are domiciled in Yarmouth Port, MA.

The ratings reflect Barnstable’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

The negative outlooks reflect a deterioration in underwriting performance in recent years that has resulted in underwriting and operating metrics falling more in line with the personal property composite average. Recent years have been adversely impacted by more frequent severe weather, which Barnstable has absorbed with only a moderate loss to surplus. While the five-year loss ratio average remains materially better than the composite, this is offset by the company’s elevated expense position, which together yields a combined ratio average that no longer outperforms the composite. Other key performance indicators, including return on revenue and operating ratios, are also aligned; however, these held comparatively stronger positions in previous years.

The group’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, favorable loss reserve development, and underwriting leverage that is considerably below the composite. The limited business profile reflects the group’s focus as a niche homeowner writer specifically on Cape Cod, MA and its surrounding coastal counties. AM Best considers the company’s ERM practice as appropriate, as management diligently reviews various catastrophe models to ensure it appropriately mitigates the risk given its narrow geographic footprint.

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