Press Release - MAY 02, 2019
AM Best Revises Outlooks to Positive for Security Mutual Insurance Company and Pittstown Cooperative Fire Ins. Co.
FOR IMMEDIATE RELEASE
OLDWICK - MAY 02, 2019
The ratings reflect Security Mutual Group’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The outlook revisions to positive reflect AM Best’s expectation of sustained underwriting and operating performance that outperforms the group’s peers while maintaining very strong balance sheet strength, despite moderate volatility due to weather-related events, fire losses and competitive market conditions.
The balance sheet strength is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), favorable underwriting leverage and strong liquidity, as reflected by the group’s high quality investment portfolio with above-average liquidity measures. A comprehensive reinsurance program and consistently favorable loss reserve development trends, partially offset by limited financial flexibility as mutual insurers, further support the balance sheet.
The group’s operating performance benefits from consistently profitable underwriting results attributed to management’s strict underwriting and pricing discipline, as well as its rigorous reinspection efforts and coastal mitigation strategies. Despite operating performance that has outperformed the personal property composite over the past several years, the group maintains an expense disadvantage due to above-average commissions relative to the composite. The business profile is limited based on the group’s product line and geographic concentration, with business written solely in New York. Security Mutual Group writes primarily homeowners insurance, excluding auto and small commercial risks, included mostly under the commercial multiperil line of business. Prospectively, the group expects to maintain profitable growth by offering an array of products to specific target market segments throughout New York. AM Best considers the ERM framework and risk management capabilities to be appropriate and well-aligned with the risk profile of the organization. Despite the group’s comprehensive reinsurance program, which helps to mitigate weather-related losses, it maintains modest tail risk exposure, as reflected by the BCAR score at the 99.8% value-at-risk confidence level.
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