A.M. Best Downgrades Ratings of McMillan-Warner Mutual Insurance Company
OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has downgraded the financial strength rating to B++ (Good) from A- (Excellent) and the issuer credit rating to "bbb+" from "a-" of McMillan-Warner Mutual Insurance Company (MWM) (Marshfield, WI). The outlook for both ratings has been revised to stable from negative.
The rating actions reflect MWM's trend of increasing underwriting and operating losses over the past five years, negative cash flow, declining risk-adjusted capitalization and policyholders' surplus. Furthermore, the ratings reflect the competitive market conditions in MWM's operating territory, its dependence on reinsurance, primarily from one reinsurer, and its concentrated business profile, which has exposed the company to significant weather-related losses over the past five years.
Somewhat tempering these negative rating factors are MWM management's actions to improve underwriting results through enhanced loss control property re-inspections, tightened underwriting standards for new business, agency reviews and surcharges on policies with multiple claims. Additionally, the stable outlook and rating downgrades acknowledge MWM's strong risk-adjusted capitalization for its rating level, history of adequate loss reserving practices, long-standing agency relationships and historic presence writing property business in underserved rural areas of Wisconsin.
The ratings and outlook of MWM may have future negative rating actions if the initiatives undertaken by management to return to underwriting and operating profitability do not materialize over the intermediate term and result in future operating losses and declines in policyholders' surplus and risk-adjusted capitalization as represented by Best's Capital Adequacy Ratio (BCAR).
Conversely, future positive rating actions and/or a revised outlook may occur if MWM returns to and sustains its underwriting and operating profitability, leading to strengthened policyholders' surplus and risk-adjusted capitalization.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; and "Catastrophe Analysis in A.M. Best Ratings." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visitwww.ambest.com.
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