A.M. Best has downgraded the financial strength rating to B- (Fair) from B (Fair) and the issuer credit rating to “bb-” from “bb” of Ellington Mutual Insurance Co. (EMIC) in Hortonville, Wis. The outlook for both ratings remains negative.
Concurrently, A.M. Best has withdrawn the ratings due to management’s request to no longer participate in A.M. Best’s interactive rating process.
These rating actions are based on A.M. Best’s concerns regarding EMIC’s overall enterprise risk management (ERM), as well as its five-year trend of underwriting and operating losses, overall pricing adequacy, declining risk-adjusted capitalization and policyholders’ surplus.
A.M. Best said the ratings reflect the company’s dependence on one reinsurer, increased common stock investment leverage, concentrated business profile that has exposed the company to frequent and severe wind and hail events and management’s inability to reverse operating loss trends in the near term.
Despite these negative attributes, EMIC has adequate risk-adjusted capitalization, a history of adequate loss-reserving practices, long-standing agency relationships and an historic presence writing property business in underserved rural areas of central Wisconsin.
Source: A.M. Best