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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - OCTOBER 04, 2011 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength rating (FSR) to B (Fair) from B++ (Good) and issuer credit rating (ICR) to "bb+" from "bbb" of Mt. Morris Mutual Insurance Company (Mt. Morris) (Coloma, WI). The outlook for the ICR has been revised to negative from stable, while the outlook for the FSR is stable.
These rating actions follow Mt. Morris' approximate 40% decline in policyholder surplus as of the second quarter 2011, due to its significant underwriting losses. As a result, the company's risk-adjusted capitalization substantially deteriorated. The ratings also recognize the company's elevated underwriting and investment leverage, limited product diversification and geographic concentration of risks in Wisconsin, which exposes Mt. Morris to competitive market conditions, as well as frequent and severe weather-related events.
Offsetting these negative rating factors are Mt. Morris' generally positive operating performance over the last five years and local market knowledge.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Catastrophe Risk Management Incorporated Within the Rating Analysis"; Understanding BCAR for Property/Casualty Insurers"; "Natural Catastrophe Stress Test Methodology"; and "Catastrophe Analysis in A.M. Best Ratings." Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.