OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has revised the outlook to stable from positive for the
Long-Term Issuer Credit Ratings (Long-Term ICR) and affirmed the
Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICRs
of “a” of Church Mutual Insurance Company (Merrill, WI) and its wholly
owned subsidiaries, collectively referred to as Church Mutual Insurance
Group (the group). The outlook of the FSR remains stable. (See below for
a listing of companies.)
The ratings of the group reflect its balance sheet strength, which AM
Best categorizes as very strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise risk
management (ERM).
The revision of the Long-Term ICR outlook to stable from positive
reflects significant deterioration in underwriting performance in 2018
driven by catastrophe losses and adverse loss reserve development. These
events combined with unrealized capital losses from the equity portfolio
caused a significant decline in surplus. Although the group’s equity
portfolio has rebounded in 2019, the capital position remains
susceptible to catastrophic events related to its property exposures.
The stable outlooks are based on the expectation of improved
underwriting results that remain comparable with the composite while
maintaining very strong balance sheet strength.
The group’s very strong balance sheet strength is supported by its
strongest level of risk-adjusted capitalization, as measured by Best’s
Capital Adequacy Ratio (BCAR), as well as its conservative fixed income
investment portfolio with solid liquidity levels. The balance sheet
further benefits from a comprehensive reinsurance program with highly
rated reinsurers. These strengths are partially offset by recent adverse
reserve development in most lines of business and moderately elevated
common stock leverage relative to the composite average.
The group’s adequate operating performance is reflective of historically
profitable operating performance driven by underwriting income and
increasing net investment income. However, the group’s operating results
in 2018 were negatively impacted by higher catastrophe losses, increased
large losses, freeze claims, wildfires and adverse loss reserve
development. Despite the downturn faced by the group in 2018, its
five-year average combined ratio remains in line with the composite.
The group’s neutral business profile reflects its position as a market
leader providing insurance services for religious institutions and
related ministries. Over the past several years, the group has increased
its focus on strong brand awareness and expanded its business into new
markets and niches. The group also benefits from its proactive use of
sophisticated pricing tools and data management. The group’s ERM
framework and risk management capabilities are considered appropriate
for the risk profile of the organization. The ERM process includes a
strong risk-awareness culture and corporate governance that is supported
by the board of directors. In addition, stress testing is performed and
capital modeling account for tail risk and market corrections.
The FSR of A (Excellent) and the Long-Term ICRs of “a” have been
affirmed, with the Long-Term ICR outlook revised to stable from positive
and the FSR outlook maintained at stable for the following subsidiaries
of Church Mutual Insurance Company:
- CM Vantage Specialty Insurance Company
- CM Select Insurance Company
- CM Regent Insurance Company
On Sept. 14, 2018, Church Mutual Insurance Company purchased 100% of
American Sterling Insurance Company, a stock-based insurance company
domiciled in California as a shell company. To date, the company has not
commenced operations.
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.
AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
Maurice Thomas
Senior Financial Analyst
+1
908 439 2200, ext. 5794
[email protected]
Michelle Baurkot
Director
+1 908 439 2200,
ext. 5314
[email protected]
Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
[email protected]
Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
[email protected]
