Best’s News & Research Service - June 15, 2016 01:31 PM (EDT)
A.M. Best Revises Outlooks to Negative for Bear River Mutual Insurance Company
- June 15, 2016 01:31 PM (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 issuer credit rating of “a” of Bear River Mutual Insurance Company (Bear River) (Murray, UT).
The revision of the outlooks to negative reflects the company’s recent below-average operating performance and the challenges faced by management to return underwriting results to historical profitable levels amid competitive market conditions. Starting late in fourth-quarter 2014 and continuing through first-quarter 2016, significant deterioration in the company’s pure loss ratio has been driven by increases in auto claim frequency and severity. According to management, the emergence of these trends has been attributed to several factors including inadequate pricing and macro-economic influences not only within the state but on a national scale as well. Consistent with several market leaders, Bear River has expanded its investment in data analytics in an effort to improve pricing sophistication through the use of multivariate pricing models to attract and retain qualified policyholders who meet the company’s underwriting standards. Bear River has a geographic concentration in Utah where, as of year-end 2015, it is ranked sixth in the state, providing personal lines products including auto, home, dwelling and umbrella to a preferred market niche. However, this concentration exposes the company’s results to earthquake, weather-related events, competitive market conditions and changes in the legislative and regulatory environments.
Bear River maintains a solid capital position that is derived from its below-average underwriting leverage, favorable loss reserve development trends and high-quality investment portfolio. In addition, the company has strong customer loyalty and long-term agency relationships.
Key rating factors that could result in a revision of the outlooks to stable include sustained improvement in underwriting results while maintaining favorable risk-adjusted capitalization.
A key rating factor that could trigger negative rating action includes continued deterioration in underwriting results.
Further negative rating action is possible if significant erosion of risk-adjusted capitalization occurs.
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 see A.M. Best’s Recent Rating Activity web page.
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