Insurance ratings agency A.M. Best Co. said it has downgraded the financial strength rating to C (Weak) from C+ (Marginal) and the issuer credit rating to “ccc” from “b-” of Community Mutual Insurance Company in Castleton, N.Y.
Concurrently, A.M. Best has withdrawn the ratings in response to management’s request to be removed from A.M. Best’s interactive rating process.
A.M. Best said the downgrades follow Community Mutual’s continued unprofitable underwriting performance and diminished levels of surplus. In particular, in 2011, statutory surplus declined by 26.6 percent, and in 2012, it declined by an additional 18 percent.
Community Mutual has experienced significant losses attributable to major fires and weather-related events in recent years, according to A.M. Best. The company’s unfavorable operating performance is evidenced by its negative five-year average pre-tax returns on revenue and surplus.
Although the company’s pure loss ratio compared favorably to the personal property composite average on a five-year average basis, elevated loss adjustment expenses and other underwriting expenses contributed to net underwriting losses in each of the past five years.
Additionally, A.M. Best said, Community Murtual’s single-state concentration of risk exposes it to weather-related events as well as to market, regulatory and judicial issues.
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