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FOR IMMEDIATE RELEASE
OLDWICK - MARCH 16, 2015 03:15 PM (EDT)
A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of "a-" of Inland Mutual Insurance Company (Inland) (Huntington, WV).
The stable outlook is based on Inland's adequate risk-adjusted capitalization and improved operating performance in recent years. Inland's successful execution of a rollover book of business, which began in 2012, has proven to benefit Inland's overall operating performance as evidenced by favorable combined ratios in 2013 and 2014.
Inland's capital position is due to their historical pattern of surplus growth driven by favorable unrealized capital gains and declining, but positive, net investment income. This has partially offset cumulative underwriting losses and has enabled the company to generate positive net income over the past five years. However, in recent years underwriting profitability has contributed to pre-tax operating gains.
These positive rating factors are partially offset by Inland's modest size and geographic concentration relative to other companies within the property composite. As a result, Inland's earnings are susceptible to frequent and severe weather-related losses, market pressures and regulatory changes. Due to Inland's modest premium base, small changes in operating expenses can significantly impact its expense ratio. However, these factors are partially mitigated by its pure loss ratio, which historically has compared favorably with the composite average.
Negative rating actions may occur if Inland's risk-adjusted capitalization significantly declines or if the company were to return to previously experienced unfavorable operating performance. Positive rating actions are contingent on the company's ability to maintain favorable operating performance and expand its business profile while maintaining adequate risk-adjusted 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 www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center .
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.