AM Best Downgrades Issuer Credit Ratings of Employers Mutual Casualty Co and Certain Subs; Affirms Financial Strength Ratings
- November 03, 2023 01:12 PM (EDT)
Oldwick //BestWire// - AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” (Excellent) from “a+” (Excellent) and affirmed the Financial Strength Rating (FSR) of A (Excellent) of Employers Mutual Casualty Company (EMCC) (Des Moines, IA) and its five property/casualty (P/C) subsidiaries (collectively referred to as EMC Insurance Companies), which operate under an intercompany pooling agreement led by EMCC. In addition, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of EMC National Life Company (EMCNL). The outlook of these Credit Ratings (ratings) is stable. EMCC and its subsidiaries are domiciled in Des Moines, IA, except for Dakota Fire Insurance Company, which is domiciled in Bismarck, ND. (See below for a detailed listing of the companies.)
The ratings of EMC Insurance Companies reflect the group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM.
The downgrade of the Long Term ICR reflects the change in AM Best’s assessment of the group’s balance sheet strength to the very strong level from strongest, as it has struggled to maintain its surplus position due to underwriting losses and variability in the investment portfolio over the most recent five-year period. The group continues to maintain a competitive position in the commercial lines space within its geographic footprint, mostly in the Midwest. EMC Insurance Companies’ operating results have been challenged in recent years, particularly due to numerous significant catastrophe events and other frequent and cumulative weather events. Streamlining of product offerings, additional scrutiny in underwriting, and significant rate increases are intended to improve consistency in the group’s operating results over the near-term.
The ratings of EMCNL reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate ERM. The ratings of EMCNL also reflect its strategic importance to its parent, EMCC, represented by its diversified product profile of life, annuity and workplace products available through multiple distribution sources. EMCNL maintains consistent risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), with generally positive but declining overall earnings in recent years.
The Long-Term ICRs has been downgraded to “a” (Excellent) from “a+” (Excellent) and the FSR of A (Excellent) affirmed with stable outlooks for EMCC and its following P/C subsidiaries. These companies are all part of an intercompany pooling agreement, whereby all premiums, losses and expenses are shared proportionally based on their stated pooling participation:
- Dakota Fire Insurance Company
- EMC Property & Casualty Company
- EMCASCO Insurance Company
- Illinois EMCASCO Insurance Company
- Union Insurance Company of Providence
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.