A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb” of Bremen Farmers Mutual Insurance Co. (Bremen) in Bremen, Kan. The ratings agency also revised the outlook to positive from stable and affirmed the financial strength rating of B++ (Good) and the issuer credit rating of “bbb+” for Marysville Mutual Insurance Co. (Marysville Mutual) in Marysville, Kan.
A.M. Best said Bremen has experienced recent improvement in operating performance and overall risk-adjusted capitalization. The company posted declines in surplus in the earlier five year period; however, in the past three years, Bremen has been able to grow surplus consecutively, and this trend continues through 2015.
Bremen’s improved risk-adjusted capitalization and operating results are due to management’s profitability initiatives including rate revisions, deductible and coverage modifications, and property inspections. The company also maintains a stable management team contributing to its long-term presence in Kansas.
Partially offsetting these positive rating factors is the company’s geographic concentration, which exposes it to significant wind and hail losses. The company has overall negative pre-tax operating losses over a five-year period mainly due to the frequency and severity of weather-related events. As a result, the five-year average combined ratio compares unfavorably with the personal property composite, however, the company is trending in a positive direction.
The positive outlook for Marysville Mutual reflects the company’s strengthening risk-adjusted capitalization and consistently favorable underwriting and operating performance, A.M. Best said.
The company has grown surplus in four of the past five years mainly due to profitable underwriting results complemented by a steady stream of fee and net investment income. Despite underwriting losses in 2011, the company’s five-year average combined ratio exceeds the personal property composite.
Partially offsetting these positive rating factors is Marysville Mutual’s geographic concentration, which exposes it to frequent and severe weather-related events, as well as the judicial, regulatory and economic environment. However, the company maintains a comprehensive reinsurance program to mitigate potential catastrophic losses.
Source: A.M. Best
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