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 Ratings of “a” (Excellent) of Maine Employers’ Mutual Insurance Company (Portland, ME) and its wholly owned subsidiaries, MEMIC Indemnity Company and MEMIC Casualty Company (both domiciled in Manchester, NH). All three companies collectively are referred to as MEMIC Group.
The Credit Ratings (ratings) reflect MEMIC Group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The negative outlooks reflect a deteriorating trend in operating performance metrics, which compare unfavorably with the workers’ compensation composite. While MEMIC Group has generated net income in each of the last five years, the group has not reported an underwriting gain during this period. MEMIC Group’s five-year average combined ratio after policyholder dividends trails the workers’ compensation composite by over 10 points, due mainly to elevated loss and loss adjustment expenses. Ongoing rate pressure and significant rate decreases, which began in earnest 2014, have impacted the workers’ compensation market in Maine, where MEMIC Group derives 40% of its direct premium written. However, rates are expected to stabilize in 2021, with just a minor increase in loss costs. Negative rating action may result if operating metrics fail to meet projections, continue to materially lag workers’ compensation composite results, or fall short of AM Best’s expectations.
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