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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 B++ (Good) and the Long-Term ICRs of “bbb” of Wisconsin Reinsurance Corporation (WRC) and 1st Auto & Casualty Insurance Company (1st Auto), collectively referred to as Wisconsin Reinsurance Group (WRG) (Madison, Wisconsin). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect WRG’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The revised Long-Term ICR outlook reflects surplus declines in recent years driven by the negative impact of weather-related events and continued below-average performance in the automobile insurance book of business.

WRG’s strong balance sheet strength is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and high quality investment portfolio. These strengths are partially offset by elevated underwriting leverage metrics relative to peers, primarily driven by above-average premium leverage and higher reinsurance dependence, as measured by ceded leverage. Additional offsetting factors include limited financial flexibility, with surplus growth tempered by stockholder dividend payments and changes in nonadmitted assets.

WRG’s adequate operating performance reflects pretax operating income reported in four of the last five years, with 2019 being the outlier as severe weather-related events swept across central and northern Wisconsin and influenced results. Additionally, recent performance has been pressured by declining profitability in reinsured business written by client companies, as well as continued weak performance in the direct auto insurance book. The limited business profile reflects the group’s geographic concentration in the Midwest and susceptibility to weather-related losses operating as a reinsurance provider to mutual insurance companies. AM Best considers the ERM framework and risk management capabilities appropriate for the risk profile of the organization. The group’s exposure to severe weather events is partially mitigated through a comprehensive reinsurance program that includes a diversified panel of high quality reinsurers.

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 Guide to 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 credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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Maurice Thomas
Senior Financial Analyst
+1 908 439 2200, ext. 5794
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
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Michelle Baurkot
+1 908 439 2200, ext. 5314
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Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644

[email protected]

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