AM Best Revises Mid-Hudson Group Outlooks to Negative, Affirms Ratings

August 11, 2022
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AM Best has revised the outlooks to negative from stable while affirming the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of Claverack Cooperative Insurance Co., Midrox Insurance Co. and Mid-Hudson Co-Operative Insurance Co. These companies are collectively referred to as Mid-Hudson Group and domiciled in Montgomery, New York.

AM Best said the credit ratings reflect the group’s balance sheet strength, which AM Best assesses as very strong, as well as its “adequate operating performance, limited business profile and appropriate enterprise risk management.”

However, the revision of the outlooks to negative from stable reflects the “deterioration in the group’s operating performance.” AM Best said that over the past four years and continuing into 2022, the group has reported unfavorable underwriting results for various reasons including increased fire losses and weather-related events, as well as increasing reinsurance costs. In 2020 and 2021, the group reported numerous fire losses and a weather-related event that significantly increased incurred loss totals and resulted in the group reporting elevated combined ratios.

“Management has taken aggressive actions to reverse this trend, which include targeted rate increases, terminated unprofitable agents, increased reserves, and reduced policies while maintaining premium levels,” AM Best stated. “To date, the underlying book of business has seen some improvement, but 2022 results continue to be unfavorable, particularly relative to the adequate assessment.”

AM Best added that despite deterioration in operating results, the group has been able to maintain its strongest risk-adjusted capitalization and very strong balance sheet assessment through additions to policyholder surplus in four of the past five years as a result of realized and unrealized gains given the high allocation to equities. However, recent equity market volatility has driven deterioration in surplus.

In 2019, Mid-Hudson Co-Operative, Midrox and Claverack joined forces under a management company, Statewide Underwriting Services (SWUS), which provides underwriting, marketing, claims and accounting services The affiliation provided access to more services and expanded coverages and he pooling of resources also enabled SWUS to invest in information technology and product development, the companies said at the time.

The company writes commercial multiple peril, homeowners multiple peril, fire, farm and homeowners in New York state only through more than 300 independent agents and brokers.

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