OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating to B+ (Good) from B (Good) and the Long-Term Issuer Credit Ratings to “bbb-” (Good) from “bb+” (Good) of Buckeye State Mutual Insurance Company and its affiliate, Home and Farm Insurance Company. The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in Piqua, OH and are referred to as Buckeye.
The ratings reflect Buckeye’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
The upgrades are based on recent improvement in Buckeye’s overall balance sheet strength, driven by organic surplus growth, a return to favorable reserve development, a reduction in underwriting leverage metrics, and risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), remaining at the strongest level. Earlier adverse development in the company’s auto book has reversed with overall reserve levels maintained above the external actuaries midpoint. Additionally, management began paying down its outstanding surplus notes in 2021, which will improve Buckeye’s overall quality of capital.
Buckeye’s underwriting and operating performance has improved from earlier years, as a result of exiting non-core states, milder weather patterns and a decrease in frequency in personal auto claims due to the COVID-19 pandemic.
Buckeye has a strong market presence and solid agency relationships conducting business primarily in Ohio, Kansas and Indiana. However, as the geographic spread of risk is still somewhat limited, Buckeye remains susceptible to frequent and severe weather-related events.
While the company’s ERM is considered marginal, management has enhanced the risk framework and begun utilizing third parties for exposure analysis and investment decisions. Buckeye also changed its catastrophe aggregate contract to a property loss program to mitigate risk and limit volatility in periods of above average weather losses.
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