A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of B+ (Good) and issuer credit rating of “bbb-” of Missouri Valley Mutual Insurance Co. (MVM) in Burke, S.D.
The revised outlook for MVM reflects its continued operating losses resulting from frequent weather-related underwriting losses and the continued erosion in its policyholders’ surplus and risk-adjusted capitalization.
Additionally, MVM’s modest size and geographic concentration make its earnings susceptible to frequent and severe weather-related losses, market pressures and regulatory changes.
Due to MVM’s modest premium base, small changes in operating losses, expenses and reinsurance costs can significantly impact its combined ratio.
Somewhat offsetting these negative rating factors are MVM’s adequate risk-adjusted capitalization, which is derived from its conservative investment profile and moderate underwriting leverage. Further, the ratings recognize MVM’s long-standing agency relationships and local market knowledge in South Dakota.
Key rating factors that could trigger negative rating actions include a material deterioration in MVM’s underwriting and operating results, with continued erosion of its policyholders’ surplus and risk-adjusted capitalization.
Source: A.M. Best
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