Best’s News & Research Service - November 23, 2015 02:39 PM (EST)
A.M. Best Revises Outlook to Stable for Bremen Farmers Mutual Insurance Company
- November 23, 2015 02:39 PM (EST)
Oldwick //BestWire// - A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of Bremen Farmers Mutual Insurance Company (Bremen) (Bremen, KS).
The revision to the outlook is a result of Bremen’s recent improvement in operating performance and overall risk-adjusted capitalization. The company posted declines in surplus in the earlier five year period; however, in the past three years, Bremen has been able to grow surplus consecutively, and this trend continues through 2015. Bremen’s improved risk-adjusted capitalization and operating results are due to management’s profitability initiatives including rate revisions, deductible and coverage modifications, and property inspections. The company also maintains a stable management team contributing to its long-term presence in Kansas.
Partially offsetting these positive rating factors is the company’s geographic concentration, which exposes it to significant wind and hail losses. The company has overall negative pre-tax operating losses over a five-year period mainly due to the frequency and severity of weather-related events. As a result, the five-year average combined ratio compares unfavorably with the personal property composite, however, the company is trending in a positive direction.
As reflected in the stable outlook, A.M. Best believes the ratings are appropriately positioned. However, positive rating action may occur if the company’s operating performance continues to trend positively while improving risk-adjusted capitalization. Conversely, negative rating actions may occur following a return to volatile operating results contributing to a material decline in risk-adjusted capitalization.
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.
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