AM Best


A.M Best Downgrades Ratings of CAMICO Mutual Insurance Company


CONTACTS:

Robert E. Brokaw
Financial Analyst
(908) 439-2200, ext. 5771
robert.brokaw@ambest.com

Charles M. Huber
Managing Senior Financial Analyst
(908) 439-2200, ext. 5122
charles.huber@ambest.com
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - JULY 02, 2015 11:21 AM (EDT)
A.M. Best has downgraded the financial strength rating to B+ (Good) from B++ (Good) and the issuer credit rating to "bbb-" from "bbb" of CAMICO Mutual Insurance Company (CAMICO) (San Mateo, CA). The outlook for all ratings has been revised to stable from negative.

The ratings reflect CAMICO's supportive risk-adjusted capitalization; strong market presence and expertise in the accounting professional liability market, including good geographic spread of risk; and consistently high policyholder retention. CAMICO also has implemented programs to reduce retained risks and to enhance operational efficiencies, including base rate adjustments, changes to reinsurance coverage, restriction of policy limits offered to a maximum of $2 million and a reduction in operating expenses.

Partially offsetting these positive factors is the company's underwriting concentration of risk, which has resulted in volatility in results. Contributing to this has been adverse loss reserve development on prior accident year claims, which has continued into the first quarter of 2015. In addition, investment income has been a challenge as a result of the low interest rate environment producing lower returns. Furthermore, CAMICO provided capital to its subsidiary in 2014 to support its ongoing business operations, which curtailed CAMICO's surplus growth. Favorable operating performance remains challenging due to the potential for further adverse development as well as continuation of the low interest rate environment and CAMICO's preponderance of investments in interest generating securities.

Favorable rating consideration would be given to more consistent, positively underwriting and operating results over an extended period of time while growing policyholders' surplus and further strengthening the balance sheet. The ratings could be further downgraded from material decreases in risk-adjusted capitalization or from adverse claims trends, continued volatility in claims severity or frequency, or a rise in expenses.

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center.

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AMB# Company Name
010748 CAMICO Mutual Insurance Company