AM Best Downgrades Issuer Credit Rating of Mt. Morris Mutual Insurance Company, Revises Under Review Status to Negative Implications
July 19 2024 - 4:39PM
Business Wire
AM Best has downgraded the Long-Term Issuer Credit Rating
(Long-Term ICR) to “bbb” (Good) from “bbb+” (Good) and affirmed the
Financial Strength Rating of B++ (Good) of Mt. Morris Mutual
Insurance Company (Mt. Morris) (Coloma, WI). Concurrently, AM Best
has maintained the under review status for these Credit Ratings
(ratings) and revised the implication status to negative from
developing.
The ratings reflect Mt. Morris’ balance sheet strength, which AM
Best assesses as strong, as well as its marginal operating
performance, limited business profile and appropriate enterprise
risk management.
The downgrade of the Long-Term ICR considers the volatility in
Mt. Morris’ key operating performance metrics throughout the past
several years, driven by weather-related loss activity along with
the impact of inflation on rising loss costs. Consequently, the
company’s combined and operating ratios have been increasing
gradually over the most recent three-year period, which has
impacted its five-year average metrics adversely. Additionally, Mt.
Morris’ results have shifted out of alignment with its
adequate-assessed peer group and more in alignment with the
marginal assessment level. Management has been and continues to
address this volatility through various actions, including but not
limited to rate increases, refined underwriting guidelines, and
reducing its risk exposures in certain lines of business to support
growth in historically profitable lines of business, all of which
are expected to promote stabilization in results.
The ratings were initially placed under review with developing
implications in December of 2023, pending AM Best’s ability to
thoroughly assess the financial and operational impacts of several
mergers and acquisitions transactions on Mt. Morris’ rating
fundamentals. Effective Jan. 1, 2024, Mt. Morris successfully
executed five merger agreements and four affiliation agreements
with town mutual insurers in its domiciled state of Wisconsin, thus
expanding its spread of risk and overall exposure base within the
state. The under review status has been maintained, yet the
implication status has been revised to negative from developing,
due to concerns about the overall effectiveness of the company’s
risk management framework in light of its broadened risk profile.
The amount of effort required to roll the new policies onto Mt.
Morris’ book of business has strained the company’s operational
capabilities and on-time reporting of its annual and quarterly
statement filings. The ratings will remain under review until
statutory filings are completed, although in the event that risk
management capabilities still fail to conform with Mt. Morris’ risk
profile, then the ratings could be downgraded further.
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. For more information,
visit www.ambest.com.
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Lauren Magro Financial Analyst +1 908 882 2082
lauren.magro@ambest.com
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