OLDWICK, NJ–(BUSINESS WIRE)–AM Best downgraded Associated Mutual Insurance’s financial strength rating from B+ (good) to B++ (good) and the issuer’s long-term credit rating to “bbb-” (good) from “bbb” (good) Cooperative (Associated Mutual) (Woodridge, NY). The outlook for these credit ratings (ratings) has been revised from negative to stable.
The ratings reflect the strength of Associated Mutual’s balance sheet, which AM Best rates as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
The rating downgrades reflect the evolution of Associated Mutual’s risk management capabilities, which have not been aligned with its risk profile, particularly with respect to reserve management and performance. global operations. Although ERM initiatives continue to be implemented in business operations, the balance sheet remains under pressure from a history of unfavorable reserve development, high reserve leverage relative to its policyholder surplus and continued unfavorable operating performance. The inability to effectively manage and control these pressure points over time calls into question the overall effectiveness of the ERM program. The revised outlook from stable to negative reflects the company’s stronger risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), which allows the development of ERM stocks to fully assess their effectiveness at improve these pressure points.
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