Best’s News & Research Service - February 15, 2022 11:53 AM (EST)
AM Best Revises Issuer Credit Rating Outlook to Negative for Wolverine Mutual Insurance Company
- February 15, 2022 11:53 AM (EST)
Oldwick //BestWire// - AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Wolverine Mutual Insurance Company (Wolverine) (Dowagiac, MI). The outlook of the FSR is stable.
The Credit Ratings (ratings) reflect Wolverine’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The negative Long-Term ICR outlook reflects the deterioration in Wolverine’s operating performance in recent years, particularly in comparison with the current adequate assessment. Although the company’s operating performance is assessed currently as adequate, the trend in operating results has been adverse for three consecutive years. The recent deterioration is driven primarily by elevated catastrophe losses from several hail and windstorms, large homeowner losses, declining written and earned premium volumes and increased competitive pressures from new entrants into the state. Further, underwriting cash flows were negative over the past four years, while operating cash flows were declining or negative in those years as well. While management has taken actions to stabilize results, the ultimate effectiveness in returning performance to historical norms is uncertain. AM Best will continue to monitor the execution of management’s plans and their impact on alleviating pressure on Wolverine’s operating performance.
The stable outlook of the FSR reflects Wolverine’s balance sheet strength, which is supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), conservative investment portfolio, favorable loss reserve development and comprehensive reinsurance program.
Wolverine’s business profile is limited, primarily because of its concentration of personal lines business in Michigan. The company’s geographic concentration in Michigan and predominant property risks expose the company to frequent and severe weather events, as well as changes to the state’s No-Fault Act and mandatory participation in the Automobile Michigan Catastrophic Claims Association.
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.