AM Best Revises Outlooks to Negative for Missouri Valley Mutual Insurance Company

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 of “bbb-” (Good) of Missouri Valley Mutual Insurance Company (MVMIC) (Burke, SD).

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

The revised outlooks to negative from stable are based on underwriting losses that have been reported in four consecutive years, with heightened losses occurring in 2022 and 2024. MVMIC experienced the worst losses in its history in 2022 as a result of two catastrophe events and multiple hailstorms, while an increasing frequency of losses in 2024 resulted in deterioration of the company’s combined ratio and operating return metrics. The combined ratio has been above breakeven in three of the past five years and now exceeds the composite average. Despite the unfavorable trend in recent years, the company’s loss and loss adjustment expense ratios remain below the composite and corrective actions are in place to improve results going forward. However, it is uncertain at this time if MVMIC will execute these plans successfully to return to underwriting profitability.

The balance sheet strength assessment of adequate is driven by MVMIC’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), albeit declining in recent years. Favorable liquidity metrics and low underwriting leverage metrics further contribute to the adequate assessment, while being partially offset by the company’s limited financial flexibility and scale of operations.

AM Best assesses MVMIC’s business profile as limited due to its concentration as a single-state writer in South Dakota, exposing results to judicial, economic, and weather-related events. The ERM assessment of appropriate reflects risk management capabilities that align with the company’s moderate risk profile.

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