A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from B (Fair) and the issuer credit rating to “a+” from “bb+” of Austin Mutual Insurance Co. (Austin) in Maple Grove, Minn. The outlook for both ratings has been revised to stable from positive, A.M. Best announced.
The upgrades are due to the increase in Austin’s intercompany quota share reinsurance agreement from 35 percent to 100 percent as of Jan. 1, 2013, with the lead company of Main Street America Group, NGM Insurance Co., having become a fully reinsured member.
A.M. Best does not expect to downgrade (or place a negative outlook on) the ratings of Austin in the near to mid-term.
However, such actions would ensue if the company’s relationship with the Main Street America Group, (most specifically its intercompany reinsurance arrangements) were to incur material changes or have a severe reduction in Austin’s capitalization due to an increased credit leverage of its reinsured book of business in the event of a catastrophe.
Source: A.M. Best