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FOR IMMEDIATE RELEASE
OLDWICK - JULY 08, 2020 11:50 AM (EDT)
AM Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Time ICR) to “a” from “a-” of Michigan Millers Mutual Insurance Company (Michigan Millers) (Lansing MI). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
Concurrently, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” of Western National Mutual Insurance Company (Edina, MN) and its affiliates, collectively known as Western National Insurance Pool (Western National). The outlook of these ratings is stable. (See below for a detail listing of companies.)
The ratings of Michigan Millers reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). Michigan Millers’ ratings also benefit from support from its affiliation with Western National.
The rating actions reflect Michigan Millers’ significant improvement in its operating performance over the past four consecutive years following its affiliation with Western National in 2015. Since its affiliation agreement, the company reported improved operating earnings in each of the past four years through 2019, driven by sound underwriting performance, coupled with solid and growing investment income. Michigan Millers’ improved underwriting performance is due largely to significant underwriting initiatives, which includes exiting personal lines of business and a managing general agency relationship, freezing the defined pension benefit plan and strengthening of loss reserves, as well as reinsurance protection for its personal lines run-off book of business provided by Western National.
Additionally, the assessment of Michigan Millers’ very strong balance sheet strength is based on its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), conservative investment portfolio, stable loss reserving trends and its comprehensive reinsurance program. These positive rating factors are offset partially by the company’s limited financial flexibility. The ratings also reflect Michigan Millers’ limited business profile, largely due to its limited geographical spread as a commercial writer in Michigan, Minnesota, New York and Washington, which exposes the company to weather-related events, as well as potential judicial and regulatory challenges.
The ratings of Western National reflect the group’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, neutral business profile and appropriate ERM. The group maintains the strongest level of risk-adjusted capitalization, as measured by BCAR, which benefits from stable loss reserving trends, a prudent investment portfolio and a comprehensive reinsurance program. The group’s strong operating performance is demonstrated by favorable underwriting and operating return measures, which compares favorably with the group’s peer averages. Western National is a super-regional carrier with well-diversified geographic and product risk spread. The group underwrites a variety of commercial and personal lines products in 20 states.
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-“, each with a stable outlook have been affirmed for the members of Western National Insurance Pool:
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 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.
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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.