MARCH 31, 2015 01:52 PM (EDT)

A.M. Best Revises Outlook to Stable for Southern Mutual Church Insurance Company

 Marc Liebowitz
Senior Financial Analyst
(908) 439-2200, ext. 5071

Gerard Altonji
Assistant Vice President
(908) 439-2200, ext. 5626

Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK - MARCH 31, 2015 01:52 PM (EDT)
A.M. Best has revised the outlook to stable from negative for the financial strength rating (FSR) and the issuer credit rating (ICR) of Southern Mutual Church Insurance Company (SMCIC) (Columbia, SC), while affirming the FSR of A- (Excellent) and the ICR of "a-".

The revised outlook reflects SMCIC's more favorable operating trends, its improved capitalization and its enhanced reinsurance protection against storm losses. Earning results over the past three years are an indication that management's initiatives to reduce the volatility in earnings have gained traction. As such, A.M. Best's expectation is SMCIC's operating measures and capitalization will continue to support the rating.

SMCIC's ratings reflect its improved operating results since 2012, strong risk-adjusted capitalization and the company's established presence in its niche market of providing coverages to churches and religious organizations. Underwriting results have improved in recent years on reduced storm losses and more favorable market conditions that have led to better rate adequacy, as well as increased premium volume. Beginning in 2012, management tightened underwriting standards, enhanced loss prevention measures, achieved better rate adequacy and refined the company's reinsurance programs to better insulate it from catastrophe losses. These actions were undertaken to stabilize the volatility in underwriting results experienced in the years immediately prior to 2012. To date, management has met or exceeded the outcomes it believed these initiatives would achieve.

The positive rating factors are offset by SMCIC's weak operating results in the years immediately prior to 2012, the competitive nature of its market niche and its geographic concentration of risk that exposes SMCIC to weather-related events. The company's business profile is somewhat geographically concentrated as more than 85% of its writings are derived from South Carolina, Georgia and North Carolina, leaving it exposed to regulatory, competitive and weather pressures. SMCIC maintains large exposure to catastrophic losses. Nonetheless, prudent utilization of reinsurance reduces this exposure to manageable levels. Regardless, A.M. Best expects operating results to continue to be negatively impacted in years that have increased weather losses. The ratings could be negatively impacted by a material decline in either SMCIC's operating results or 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. Best's Credit Rating Methodology can be found at

Key insurance criteria reports utilized:

  • Catastrophe Analysis in A.M. Best Ratings

  • Risk Management and the Rating Process for Insurance Companies

  • The Treatment of Terrorism Risk in the Rating Evaluation

  • Understanding BCAR for Property/Casualty Insurers

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center .

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

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AMB# Company Name
001847 Southern Mutual Church Insurance Company