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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 11, 2019 02:04 PM (EDT)
AM Best has downgraded the Financial Strength Rating (FSR) to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “a-” of Mountain West Farm Bureau Mutual Insurance Company (Mountain West) (Laramie, WY). The outlook of the FSR has been revised to stable from negative, while the outlook of the Long-Term ICR remains negative.
The Credit Ratings (ratings) reflect Mountain West’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management. The negative outlook on the Long-Term ICR reflects the pressure being placed on the company’s overall ERM from continued adverse underwriting results and corresponding lack of demonstrated effective actions to control and mitigate the extreme volatility in recent years. The revised FSR outlook to stable reflects the company’s very strong balance sheet strength.
The rating downgrades reflect the revision of the operating performance assessment to marginal from adequate. The group has suffered from elevated catastrophe losses in recent years. The group’s five-year average pre-tax returns on revenue and equity are negative, and compare unfavorably with the private passenger standard auto and homeowners composite. In addition, while five-year average total returns on revenue and equity have fared somewhat better due to realized capital gains, they continue to lag the composite averages. Furthermore, the group’s five-year average combined and operating ratios also trail the composite averages. The group has implemented a number of underwriting initiatives to improve exposure mitigation and underwriting results, such as revised deductibles, redesigned property zones and increased rates.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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