AM Best Downgrades Credit Ratings of Members of Midwest Family Group
AM Best has downgraded the Financial Strength Rating (FSR) to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a-” (Excellent) from “a” (Excellent) of Midwest Family Mutual Insurance Company and its wholly owned subsidiary, Midwest Family Advantage Insurance Company.
AM Best has downgraded the Financial Strength Rating (FSR) to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a-” (Excellent) from “a” (Excellent) of Midwest Family Mutual Insurance Company and its wholly owned subsidiary, Midwest Family Advantage Insurance Company. Collectively, the companies are referred to as Midwest Family Group (Midwest Family). The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in West Des Moines, IA.
The ratings reflect Midwest Family’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The rating downgrades reflect erosion in the company’s operating performance that deviates from the levels of profitability the group reported in older years. Volatility in Midwest Family’s underwriting results was impacted by continued reserve strengthening, elevated storm activity, increased reinsurance costs, which affected margins, and increased loss severity amid economic inflation that has been compounded by delays in litigated claims from court backlogs. Wind and hail deductibles, along with rate and underwriting initiatives, including non-renewal of risks outside of recently refined appetites, were implemented to address underwriting volatility.
The stable outlooks reflect AM Best’s expectation that Midwest Family will maintain its very strong overall balance sheet strength assessment, supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), which generally benefits from reliable surplus growth. AM Best further expects reserve trends to stabilize as the company continues its strengthening efforts. The company has a broad geographical presence and diverse product suite, offered through a developed network. ERM is assessed as appropriate, taking a company-wide approach in administering risk practices. The company further employs a comprehensive reinsurance program that effectively insulates the balance sheet from shock losses.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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