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FOR IMMEDIATE RELEASE
OLDWICK - MAY 20, 2020 03:58 PM (EDT)
AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a+” of Preferred Mutual Insurance Company (Preferred) (New Berlin, NY). The outlook of the FSR remains stable.
The Credit Ratings (ratings) reflect Preferred’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The Long-Term ICR outlook revision to negative is a result of the recent trend in the company’s balance sheet strength, including consecutive years of adverse reserve development, which has caused deterioration in the company’s underwriting performance, and a decline in policyholders’ surplus. Factors that could result in negative rating action include continuation of the unfavorable trend in reserve development or a material decline in risk-adjusted capitalization.
AM Best’s balance sheet strength assessment of strongest is supported by Preferred’s risk-adjusted capitalization being at the strongest level, along with generally positive growth in policyholders’ surplus over the long term that was offset partially by limitation in its financial flexibility. Preferred’s neutral business profile assessment is driven largely by its solid regional niche market with a broad product offering.
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.