Best’s News & Research Service - February 28, 2018 03:14 PM (EST)
A.M. Best Removes From Under Review With Negative Implications; Downgrades ICR of Mutual Assurance Society of Virginia
- February 28, 2018 03:14 PM (EST)
Oldwick //BestWire// - A.M. Best has removed from under review with negative implications and downgraded the Long-Term Issuer Credit Rating to “a” from “a+” and affirmed the Financial Strength Rating of A (Excellent) of Mutual Assurance Society of Virginia (Mutual Assurance). The outlook assigned to these Credit Ratings (ratings) is stable. The company is domiciled in Richmond, VA.
The ratings were placed under review with negative implications on Oct. 13, 2017, following the release of the updated Best’s Credit Rating Methodology (BCRM). The current rating actions follow the completion of A.M. Best’s analysis of Mutual Assurance under the updated BCRM.
The ratings reflect Mutual Assurance’s balance sheet, which A.M. Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The stable outlooks reflect A.M. Best’s expectation that Mutual Assurance will maintain the strongest balance sheet strength level through demonstrated underwriting capabilities.
Mutual Assurance’s balance sheet strength reflects the strongest level of risk-adjusted capitalization, a comprehensive reinsurance program and historically favorable reserve development. Partially offsetting these positive rating factors is the elevated common stock leverage compared with the personal property composite. Mutual Assurance’s operating performance was volatile in the past, driven by volatility in the equity market.
However, significant appreciation in the equity market recently has allowed Mutual Assurance to grow surplus to record levels. Mutual Assurance primarily distributes its product offerings directly to insureds. Combined with Mutual Assurance’s long-standing history in the mid-Atlantic personal property market and Chapter 25 Mutual Assessment Insurer status, these factors provide a supportive business profile. Mutual Assurance also benefits from an appropriate ERM program that supports the risk profile of the organization.
Further negative rating action could occur if there was a material decline in risk-adjusted capitalization or if there is a sustained deterioration in operating performance.
This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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