OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of IMT Insurance Company and its affiliate, Wadena Insurance Company. These companies are domiciled in West Des Moines, IA and are collectively referred to as IMT Insurance Companies (IMT).
The ratings reflect IMT’s 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 negative outlooks reflect pressures relating to balance sheet strength and operating performance. Adverse loss reserve development has trended unfavorably in recent years largely driven by a combination of the accounting treatment of retainer fees, as well as unfavorable private passenger auto liability loss development. While management responded by strengthening reserves and increasing factors to account for more recent trends, development has not yet stabilized. The development, along with modestly elevated underwriting and common stock leverage, pressures the current balance sheet assessment. Additionally, the unfavorable reserve development coupled with a rise in storm activity has led deterioration in operating performance that does not align with the adequate assessment. Corrective actions implemented include refined agency management, more granular pricing sophistication, stricter underwriting guidelines and rate increases.
The neutral business profile considers the group’s personal auto, homeowners and commercial products offered in the Midwest, whereby a substantial amount of direct premium written is generated in Iowa. The geographic and product distribution exposes the group to storm losses, which are mitigated partially by a property aggregate excess of loss reinsurance treaty. AM Best considers the formal ERM program inclusive of documented risks, mitigation strategies and stress measurements appropriate for the risk profile.
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