MAY 05, 2022 11:38 AM (EDT)
AM Best Downgrades Credit Ratings of McMillian-Warner Mutual Insurance Company
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FOR IMMEDIATE RELEASE
OLDWICK - MAY 05, 2022 11:38 AM (EDT)
AM Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” (Good) from “bbb” (Good) of McMillan-Warner Mutual Insurance Company (MWM) (Marshfield, WI). The outlook of these Credit Ratings (ratings) has been revised to stable from negative.
The ratings reflect MWM’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
The rating downgrades reflect the company’s evolving ERM practices, which have lacked the capability to help it manage concentration risk effectively, as demonstrated by the continued deterioration in its operating results in recent years mainly due to weather-related events and an increase in fire losses. Although ERM initiatives continue to be implemented in business operations, MWM has experienced volatility in policyholders’ surplus and declines in key profitability metrics over the past five-year period, bringing the ERM program’s overall effectiveness into question. The change in outlook reflects the strength of the company’s risk-adjusted capitalization, and the expectation that ERM actions will begin to gain traction and become evident in improved operating results.
MWM’s strong balance sheet continues to be supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), stable loss reserving trends, and an appropriate reinsurance program. The marginal operating performance assessment reflects key operating metrics, which lag AM Best’s personal property composite on both a five- and 10-year average basis. The business profile assessment reflects the company’s concentration of personal property business in a single state environment.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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.