A.M. Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating A- (Excellent) and the Long-Term Issuer Credit Rating “a-” of Des Moines, Iowa-based Petroleum Marketers Management Insurance Co. (PMMIC).
The ratings reflect PMMIC’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management. PMMIC’s niche market focuses on the underground storage tank (UST) and above ground storage tank (AST) pollution liability market.
The positive outlook reflects PMMIC’s consistent and strong operating performance and very strong balance sheet.
The company’s favorable risk-adjusted capitalization is aided by further diversification of risk, through the addition of a large loss portfolio transfer (LPT) with the Iowa Underground Storage Tank State Fund. Favorable development of this newly acquired LPT is expected to lead to enhanced balance sheet strength in future years.
The ratings also recognize management’s long experience in the UST and AST businesses and its prudent business plans over the near term. PMMIC’s operating ratios, which have outperformed the industry composite, are reflective of its strict underwriting guidelines, with an emphasis on loss control, beneficial cost structure due to its management contract with its affiliated management company, R&A Risk Professionals, Inc., as well as tank inspection and monitoring efforts.
These positive rating factors are offset by the company’s limited business profile. The majority of PMMIC’s business is related to Iowa. In addition, claims are generally longer-tailed and can take some time to close. While the company’s balance sheet strength remains very strong, it is somewhat mitigated by elevated equity market exposure, which could result in surplus volatility.
Source: A.M. Best