OLDWICK, N.J.–(BUSINESS WIRE)–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 Wisconsin Municipal Mutual
Insurance Company (WMMIC) (Madison, WI). The outlook of the FSR has been
revised to stable from negative, while the Long-Term ICR remains
negative.
The ratings reflect WMMIC’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 (ERM).
The rating downgrades reflect WMMIC’s trend of operating losses in four
of the past five years that resulted in declines in policyholders’
surplus. The operating losses were due to unfavorable underwriting
results driven by adverse loss reserve development; this was driven by
several large civil rights liability claims settled in the federal court
system that were not subject to Wisconsin’s tort cap law. Further
exacerbating the decline in policyholders’ surplus were dividends paid
to members/policyholders in four of the past five years. Although WMMIC
had successfully attracted and retained member/policyholders through
profit-sharing and returns of capital, this resulted in negative
five-year average return measures and significantly elevated combined
and operating ratios.
Over the latest five-year period, policyholder dividends have averaged
approximately 47 points of the company’s combined ratio, which averaged
179.6%. Further, WMMIC has a limited business profile due to its pool of
potential member/policyholders, product offerings and single-state
concentration.
The negative Long-Term ICR outlook reflects the decline in policyholder
surplus over the last five years, adverse operating results and the
overall effectiveness of WMMIC’s enterprise risk management given recent
results.
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
Kevin Dorsey
Senior Financial Analyst
+1 908
439 2200, ext. 5401
[email protected]
Joseph
Burtone
Director
+1 908 439 2200, ext. 5125
[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]
