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-” of Inland Mutual Insurance Company (IMIC) (Huntington, WV).
The Credit Ratings (ratings) reflect IMIC’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.
The negative outlooks reflect a trend of deteriorating operating performance in recent years, driven by unfavorable underwriting results. The increased underwriting deficits were attributable to higher loss and expense ratios on a declining premium base. This has resulted in combined ratios that are above breakeven and substantially higher than the industry composite average.
AM Best’s balance sheet strength assessment of very strong is supported by IMIC’s risk-adjusted capitalization being at the strongest level. Positive growth in policyholders’ surplus over the past five years has been offset partially by limited financial flexibility and scale of operations. IMIC’s limited business profile assessment is driven largely by its geographic concentration in a few states within the Appalachian region of the United States, which exposes results to frequent and severe weather-related events, as well as potential judicial, economic, competitive and regulatory challenges.
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