AM Best Revises Outlooks to Negative for Associated Mutual Insurance Cooperative

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good) of Associated Mutual Insurance Cooperative (Associated Mutual) (Woodridge, NY).

The Credit Ratings (ratings) reflect Associated Mutual’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).

The revised outlooks to negative reflect key metrics of balance sheet strength that compare unfavorably over the past five years with Associated Mutual’s peer group with a similar balance sheet strength baseline Long-Term ICR assessment. Such metrics include (but are not necessarily limited to) policyholders’ surplus growth, underwriting leverages, loss reserve leverages and loss reserve development trends. These unfavorable rating attributes are offset to some extent by the company’s risk-adjusted capitalization, which has continued to improve over time, despite the additional increase in net required capital attributable to adverse loss reserve development trends over the past ten years.

Associated Mutual’s marginal operating performance contributes to long-term volatility in annual policyholders’ surplus growth, exacerbating overall impact on balance sheet strength of unfavorable rating factors. Associated Mutual’s limited business profile assessment is driven largely by its product focus concentrated geographically in New York, which exposes results to frequent and severe weather-related events, as well as potential judicial, economic, competitive and regulatory challenges.

AM Best assesses Associated Mutual’s ERM as appropriate for its risk profile, although marginal operating profitability over the longer term also can contribute to broadly reduced efficacy of potential efforts to expand risk management capabilities as necessary over time.

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