A.M. Best Co. announced it has downgraded the financial strength rating to B+ (Good) from B++ (Good) and issuer credit ratings to “bbb-” from “bbb” of ILM Group (ILM) and its members, which include Indiana Lumbermens Mutual Insurance Co., Lone Star National Insurance Co. and National Building Material Assurance Co.. All companies are domiciled in Indianapolis, Ind. The outlook for all ratings has been revised to stable from negative.
Best said the rating actions reflect ILM’s poor underwriting results over the recent five-year period, primarily driven by large property losses, an accumulation of weather related losses, relatively high underwriting expenses and areas of adverse loss reserve development in select accident years. While ILM’s risk-adjusted capitalization supports its current ratings, competitive market conditions, weak underwriting results and challenging macroeconomic conditions have adversely impacted the group’s operating performance in recent years.
Although management has implemented several strategic initiatives to improve the group’s underwriting performance in recent years, the execution of ILM’s business plan has yet to materialize into profitable results. As a result, A.M. Best remains concerned with the group’s volatile underwriting performance and expectations for continued losses, as well as further capital erosion through 2012 as ILM continues to face competitive market conditions, a challenging macroeconomic environment and ongoing exposure to property and weather related losses.
Source: A.M. Best
Topics AM Best
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