Best’s News & Research Service - October 02, 2018 10:03 AM (EDT)
A.M. Best Revises Outlooks to Negative for Kentucky Employers’ Mutual Insurance
- October 02, 2018 10:03 AM (EDT)
Oldwick //BestWire// - A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issue Credit Rating of “a-” of Kentucky Employers’ Mutual Insurance (KEMI) (Lexington, KY).
The ratings reflect KEMI’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The outlook revisions to negative largely reflect the uncertainty of the company’s exposure, partly arising from its position as a writer of last resort in Kentucky, to occupational disease claims from coal mining operations, particularly those brought under the Federal Coal Mine Health & Safety Act (FCMHSA). While it appears that KEMI is estimating loss reserves for those occupational disease exposures more conservatively, further pressure on its balance sheet may occur as the new reserving methodology was implemented just recently. In addition, year-to-year frequency for FCMHSA claims is sporadic as it tends to be closely correlated to mine closures.
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