A.M. Best Co. said it has revised the outlook to “negative” from “stable” and affirmed the financial strength rating of B+ (Good) and issuer credit rating of “bbb-” of Grange Mutual Fire Insurance Company(Troy, Penn.).
A.M. Best said the revised outlook reflects A.M. Best’s concerns regarding Grange’s recent trend of weakened underwriting performance and the potential impact that future underwriting losses could have on its capitalization.
The Oldwick, N.J.-based ratings agency A.M. Best said Grange’s management recognizes the current competitive pressures in Grange’s business segment, the challenges to minimize general operating expenses and its exposure to fire and weather-related losses while containing reinsurance costs.
Over the past two years, Grange’s underwriting losses were attributed mostly to higher than anticipated fire-related claims that affected its predominant property book of business, depressed rate levels due to competitive market conditions and elevated reinsurance costs.
A.M. Best commented that management is acting on several operational and underwriting strategies that address pricing levels, exposure management, operating efficiencies and expense management. These, together with other actions being taken by management, are designed to return Grange to the profitability levels it had achieved prior to 2011, the ratings agency said.
A.M. Best also commented Grange’s strength, saying that the company benefits from its conservative underwriting leverage, long-term agency relationships, extensive knowledge of the operating territory and the ability to quickly implement operating changes because of its size and management structure.
A.M. Best said negative rating actions could result if Grange’s operating performance continues to deteriorate or there is an unexpected material decline in its risk-adjusted capitalization.
Source: A.M. Best Company Inc.
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