AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of The Brethren Mutual Insurance Co. in Hagerstown, Maryland.
AM Best said the credit ratings reflect Brethren’s balance sheet strength, which its analysts assess as “very strong,” as well as its “adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).”
However, Brethren’s revised ratings outlooks to negative from stable reflect “deterioration in the company’s operating performance metrics,” which AM Best said have been driven primarily by weather-related events that have contributed to underwriting losses in each of the last three years.
“Brethren has been proactively taking corrective actions including implementing new business moratoriums, coverage restrictions, deductible changes and non-renewing policies with poor loss experience; however, results have continued to trail the composite,” AM Best said. “Continuation of these trends would likely lead to a revision in AM Best’s adequate operating performance assessment.”
The ratings firm added that Brethren’s very strong balance sheet strength is supported by the “strongest level of risk-adjusted capitalization,” as measured by Best’s Capital Adequacy Ratio (BCAR). The neutral business profile reflects the company’s market leading position in its top line of business, farmowners’ insurance, in its core states of Maryland and Delaware.
In addition, AM Best said the company has a modest amount of geographic diversification with a spread of risks between commercial, farm, home and auto. AM Best considers Brethren’s ERM program to be appropriate for its risk profile and includes comprehensive risk management.
Source: AM Best
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