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FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 16, 2018 03:42 PM (EST)
A.M. Best has downgraded the Financial Strength Rating (FSR) to B (Fair) from B+ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb+” from “bbb-” of State Mutual Insurance Company (State Mutual) (Rome, GA). The outlook of these Credit Ratings (ratings) has been revised to stable from negative.
The ratings reflect State Mutual’s balance sheet strength, which A.M. Best categorizes as adequate, as well as its marginal operating performance, neutral business profile and marginal enterprise risk management.
The downgrades reflect the declining trend in capital and surplus as a result of capital losses from investments, operating losses due to high expenses and reduced net premiums resulting from reinsurance transactions. While capitalization has been supported in part by reinsurance, A.M. Best does not view such one-time surplus relief transactions as a viable long-term strategy to support capital. In addition, State Mutual holds higher risk assets in its investment portfolio that reduce liquidity and could result in further capital losses. A.M. Best will continue to monitor the company’s operating results and capital position, as it attempts to execute on its plans to grow its individual accident and health business.
This press release relates to Credit Ratings 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 see A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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