Best’s News & Research Service - November 20, 2019 12:22 PM (EST)
AM Best Withdraws Credit Ratings of Wisconsin County Mutual Group Members
- November 20, 2019 12:22 PM (EST)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb” of Community Insurance Corporation and Wisconsin County Mutual Insurance Corporation (both domiciled in Madison, WI), collectively referred to as the Wisconsin County Mutual Group (WCMG). The outlook of these Credit Ratings (ratings) remains negative. Concurrently, AM Best has withdrawn the ratings of WCMG at the company’s request to no longer participate in AM Best’s interactive rating process.
The ratings reflect WCMG’s balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).
WCMG’s balance sheet reflects a strong level of risk-adjusted capitalization, relatively conservative underwriting leverage and a high quality investment portfolio that generates consistent net investment earnings year-over-year. Partially offsetting these positive rating factors is the ongoing payment of policyholder dividends, which have constrained surplus growth, and moderately unfavorable loss reserving trends, which has put pressure on the current balance sheet assessment. Marginal operating performance is illustrated by an elevated combined ratio, which compares unfavorably with the commercial casualty composite, as well as negative pre-tax and total operating returns over the recent five-year period. Underwriting results have been affected by lawsuit verdicts on several prior-year other liability and workers’ compensation claims along with loss and loss adjustment expenses (LAE) adverse loss reserve development. While the pure loss ratio remains favorable as compared with its peer composite, significant legal defense expenses associated with civil rights cases have elevated the LAE ratio, which continue to impact the combined ratio.
WCMG maintains a limited business profile reflective of its geographical concentration in Wisconsin, as well as judicial and regulatory risks associated with federal judicial decisions with unlimited tort caps. The group’s top lines of business include workers’ compensation, other liability and commercial auto liability. Currently, the group’s ERM program is appropriate; however, certain key elements have proven inadequate given the continued volatility in underwriting results. Additionally, the group has material terrorism exposure in the event that the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) is not renewed, albeit a contingency plan is in place.
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 Understanding 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 provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.