AM Best Revises the Outlooks to Stable for Northern Mutual Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from positive and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Northern Mutual Insurance Company (NMIC) (Hancock, MI).

The Credit Ratings (ratings) reflect NMIC’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 revised outlooks reflect the significant variability in NMIC’s operating results during the latest five-year period and the material decline in operating results in 2022 as a result of elevated losses due to weather-related events and market pressures in the auto lines. While the company’s five- and 10-year average operating metrics compare favorably with the private passenger standard auto and homeowners composite, the variability in results over the last five years, coupled with the adverse results in 2022, has aligned NMIC closer to companies with an adequate operating performance assessment, resulting in a change in the outlooks to stable from positive. As management’s corrective actions on pricing begin to come to fruition, it is expected that results will begin to return to historical norms over the near term with moderate volatility due to its inherent catastrophe exposure.

The ratings also reflect NMIC’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), strong liquidity measures driven by a high-quality investment portfolio, and a comprehensive reinsurance program that helps to mitigate loss severity. The company has a limited business profile as it operates solely in Michigan, particularly in the upper peninsula. Despite having local market expertise in its territory, the company remains exposed to a highly competitive market and potential changes in the regulatory, legislative and judicial environments. NMIC’s risk management capabilities are considered to be appropriate for its complexity of business and overall risk profile.

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