AM Best Revises Issuer Credit Rating Outlook to Stable for Brotherhood Mutual Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlook to stable from negative for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Brotherhood Mutual Insurance Company (Brotherhood) (Fort Wayne, IN). The outlook of the FSR is stable.

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

The revision of the Long-Term ICR outlook to stable from negative reflects improved balance sheet strength fundamentals in recent years, supported by very strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), driven by favorable underwriting results and strong investment income generated from its robust investment portfolio and dividends from affiliates and improved, although elevated, leverage measures. The improvement is the result of management’s efforts to improve profitability by implementing wind and hail deductibles in coastal areas, along with rate increases, enhanced reinsurance and adherence to tighter underwriting guidelines. Offsetting these factors is the volatility in reserve development over the most recent five years, as management continues to strengthen reserves to maintain a more conservative position. While it has partially offset the level of surplus growth, Brotherhood has been able to absorb recent reserve development without erosion in absolute capital levels and risk-adjusted capitalization.

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