AM Best Withdraws Credit Ratings of Cameron Mutual Insurance Company
- July 12, 2023 03:21 PM (EDT)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb” (Fair) of Cameron Mutual Insurance Company (Cameron Mutual) (Cameron, MO). The outlook of these Credit Ratings (ratings) is negative. Concurrently, AM Best has withdrawn these ratings as the company has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect Cameron Mutual’s balance sheet strength, which AM Best assesses as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management.
Cameron Mutual’s overall balance sheet assessment of adequate is supported by its very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), along with its generally conservative investment portfolio primarily composed of bonds. Positive attributes are offset by capital erosion in each of the past four calendar years, eroding surplus by nearly 50% over the most recent five-year period, elevated underwriting leverage and reinsurance dependency, consistently negative operating cash flow and inconsistent loss reserve development over the medium term. The company’s loss reserve development has improved in more recent periods.
Capital erosion has been a product of the company’s marginal operating performance driven by net underwriting losses in each of the past five years. Management has been challenged by its limited profile that is primarily concentrated in Missouri (with modest exposure in Arkansas and Iowa), offering personal auto, farmowners, personal property and commercial multi-peril products. Furthermore, while management continues to refine the company’s risk portfolio in an effort to reduce aggregate exposure and volatility, these mitigation strategies have yet to gain material traction.
While company management continues to implement corrective actions, the negative outlooks reflect continued pressure on the ratings as it pertains to capital erosion and operating volatility.
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.