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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 24, 2014 02:36 PM (EDT)
A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of MutualAid eXchange (Overland Park, KS).
The revised outlook reflects MutualAid eXchange's continuing operating losses that have resulted in a further decline in its policyholders' surplus. Underwriting losses were primarily attributable to an unusual number of severe losses throughout the company's geographic footprint and significant increases in underwriting expenses.
Despite the decline in policyholders' surplus, MutualAid eXchange continues to maintain adequate risk-adjusted capitalization based on its favorable underwriting leverage that support its ratings. The company's capitalization acknowledges its favorable loss reserve development and conservative investment portfolio. The ratings also consider management's many initiatives designed to reduce underwriting expenses.
Future negative rating actions could occur if MutualAid eXchange does not substantially meet its near-term operating projections and/or there is continued deterioration in policyholders' surplus as well as risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio (BCAR).
Future positive rating actions and/or a revision of the outlook could occur if the company reaches profitable operating performance in the near term and sustains it over several periods with increasing capital strength as measured by its BCAR.
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.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.