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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - FEBRUARY 24, 2012 12:00 AM (EST)
A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of A+ (Superior) and issuer credit rating of “aa-” of Mutual Assurance Society of Virginia (Mutual Assurance) (Richmond, VA).
The revised outlook of Mutual Assurance reflects the weakening trend of total returns on surplus over the past several years driven by volatile investment markets, which may continue for awhile. The ratings also reflect the company’s solid capitalization, strong liquidity and long-standing market presence as a writer of perpetual property business in Virginia.
Partly offsetting these positive rating factors are the fluctuations in Mutual Assurance’s total return measures over the past five years due to elevated common stock leverage, as well as exposure to weather-related losses stemming from its geographic concentration and somewhat limited product scope.
Negative rating actions could occur if there were a sudden, unexpected and material decline in Mutual Assurance’s risk-adjusted capitalization, a sustained deterioration in its operating performance or total investment returns, or a diminishing of its liquidity measures.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Catastrophe Analysis in A.M. Best Ratings”; “Risk Management and the Rating Process for Insurance Companies”; and “Understanding BCAR for Property/Casualty Insurers.” Best’s Credit Rating Methodology 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.