OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” (Good) from “a-” (Excellent) of Inland Mutual Insurance Company (IMIC) (Huntington, WV). The outlooks of these Credit Ratings (ratings) have been revised to stable from negative.
The ratings reflect IMIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The rating downgrades reflect unfavorable operating performance trends in recent years from a declining premium base, which has tempered surplus growth and had an adverse impact on the favorable characteristics of capital permanency considered appropriate for the balance sheet strength baseline ICR assessment.
IMIC’s balance sheet strength assessment remains very strong and is supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), partially offset by limited financial flexibility and scale of operations.
IMIC’s adequate operating performance assessment is driven largely by key metrics of total operating earnings such as pre-tax return on revenue and operating ratio, which have remained close to the personal property lines composite over the longer term despite the deterioration in recent years.
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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