AM Best Information Services

AUGUST 27, 2013 12:00 AM (EDT)

A.M. Best Upgrades Ratings of German Mutual Insurance Company

Najam Sharif
Financial Analyst
(908) 439-2200, ext. 5326

Joseph Burtone
Assistant Vice President
(908) 439-2200, ext. 5125

Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK, N.J. - AUGUST 27, 2013 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating (FSR) to A (Excellent) from B+ (Good) and issuer credit rating (ICR) to “a+” from “bbb-” of German Mutual Insurance Company (German Mutual) (Napolean, OH), following its affiliation with Goodville Mutual Casualty Company (Goodville Mutual) (New Holland, PA) effective July 1, 2013. Both ratings have been removed from under review with positive implications and assigned a stable outlook. Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and ICR of “a+” of Goodville Mutual. The outlook for these ratings is stable.

The ratings of German Mutual reflect its pooling affiliation with Goodville Mutual. Going forward, the pooled companies will be known as the Goodville & German Mutual Pool. Currently, Goodville Mutual retains 85% of the pooled business, while German Mutual retains 15%. As a pooled member, German Mutual’s overall risk-adjusted capitalization, operating results and underwriting leverage will improve. In addition, as being part of a larger organization, German Mutual will benefit from reinsurance support, access to operational and managerial resources, improved catastrophe analysis, enhanced risk management and Goodville Mutual’s business acquisition systems. Furthermore, both companies benefit from this new affiliation through an improved geographic footprint and an expanded distribution channel.

The ratings of Goodville Mutual recognize its strong risk-adjusted capitalization, favorable operating performance, long-standing market presence, solid agency relationships, fairly conservative investment philosophy and strong risk management. Over the last five years, Goodville Mutual has reported positive net income earnings primarily driven by favorable net underwriting income and positive net investment income.

However, the pooling affiliation with German Mutual has had a somewhat negative impact on Goodville Mutual’s operating results on a consolidated basis, primarily due to unfavorable underwriting performance driven by weather-related events that occurred in German Mutual’s operating region in Ohio over the last five years. In response to recent underwriting losses, management continues to implement underwriting initiatives, which include strict agency management, substantial rate increases, utilization of a credit scoring system and extensive property re-inspections. Going forward, A.M. Best anticipates that underwriting volatility of the Goodville & German Mutual Pool may continue due to its inherent exposure to frequent and severe weather-related events particularly in Ohio; however, continuation of corrective actions while maintaining the core principals may reduce future volatility.

In future rating cycles, negative rating actions could occur if Goodville & German Mutual Pool’s underwriting performance continues to deteriorate and/or there is a reduction in its overall risk-adjusted capitalization. Any positive rating actions are contingent upon consistent and profitable underwriting and operating performance while maintaining strong capitalization.

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. Best’s Credit Rating Methodology can be found at

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.

Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.