AM Best Downgrades Credit Ratings of Arrow Mutual Liability Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb+” (Good) from “a-” (Excellent) of Arrow Mutual Liability Insurance Company (Arrow) (Chestnut Hill, MA). The outlook of these Credit Ratings (ratings) has been revised to stable from negative.

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

The rating downgrades reflect Arrow’s persistent underwriting and operating losses, which have not demonstrated sustained improvement as the company has generated an underwriting gain in only one of the past 10 years. Although Arrow reported favorable results in 2024, those results benefited from non-recurring reserve activity. Results weakened in 2025, with the company reporting an underwriting loss driven in part by elevated expenses associated with the former CEO’s estate lawsuit, which was settled in 2025. These results compare unfavorably with companies assessed at the adequate operating performance level and are more consistent with AM Best’s marginal operating performance assessment.

Arrow’s balance sheet strength assessment is supported by its strongest level risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), at year-end 2025, and liquidity metrics that compare favorably with the industry. Arrow’s BCAR has remained at the strongest level despite surplus declines in recent years. These strengths are partially offset by historical surplus volatility, limited financial flexibility and the company’s dividend-oriented operating model.

The limited business profile assessment reflects Arrow’s narrow product focus as a monoline workers’ compensation writer, its limited number of policyholders and its geographic concentration in Massachusetts.

Arrow’s ERM assessment is appropriate for the company’s size, scale and focused risk profile. Risk management practices are supported by policyholder selection, underwriting and loss control measures, as well as the use of third-party specialists.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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