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JUNE 10, 2021 01:38 PM (EDT)

AM Best Revises Issuer Credit Rating Outlooks to Stable for Members of Andover Companies Pool


CONTACTS:
 Kenneth Tappen
Senior Financial Analyst
+1 908 439 2200, ext. 5248
kenneth.tappen@ambest.com

Michelle Baurkot
Director
+1 908 439 2200, ext. 5314
michelle.baurkot@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - JUNE 10, 2021 01:38 PM (EDT)
AM Best has revised the outlooks to stable from negative for the Long-Term Issuer Credit Ratings (Long-Term ICR) and affirmed the Financial Strength Ratings (FSR) of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) for the members of Andover Companies Pool (Andover), which consists of Merrimack Mutual Fire Insurance Company and its majority-owned subsidiary, Bay State Insurance Company, and its affiliate, Cambridge Mutual Fire Insurance Company. The outlooks of the FSRs are stable. All companies are domiciled in Andover, MA.

The Credit Ratings (ratings) reflect Andover’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The revised Long-Term ICR outlook to stable from negative is based on AM Best’s expectation that Andover will maintain its very strong overall balance sheet strength, benefitting from management’s strategic initiatives that will support more stable operating performance over the intermediate term, as well as a rebound in the market value of its substantial equity portfolio. Andover’s high common stock leverage is somewhat mitigated by its diversification, through investment guidelines that set minimum investment quality standards and its buy and hold approach to securities. The outlook revision also considers refinement of its assumed property reinsurance business, including non-renewals of select programs and improved terms and conditions, which should benefit its favorable business profile. Andover is one of the largest regional mutual insurers in the Northeast region’s personal lines market with a modest share of the homeowners market in Massachusetts.

Andover’s adequate operating performance assessment is based on underwriting and operating performance metrics, which on average, perform better than the AM Best personal lines composite, despite modest volatility from weather-related events on both its direct and assumed business.

Andover’s ERM is assessed as appropriate for its risk profile, based on a formal program that includes participation from an ERM team, the executive leadership team and its board of directors.

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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.


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