Ratings Assigned to Iowa’s Midwest Family Advantage Insurance

January 17, 2018

A.M. Best has assigned a Financial Strength Rating (FSR) of A- (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” to Midwest Family Advantage Insurance Co. (Midwest Advantage). The outlook assigned to these ratings is stable.

Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of Midwest Family Mutual Insurance Co., the parent of Midwest Advantage. The outlook of these ratings is stable.

Collectively, the companies are referred to as Midwest Family Insurance Group (Group), and operate under an inter-company quota share reinsurance agreement. Both companies are domiciled in Chariton, Iowa.

Midwest Advantage, established in November 2017, was initially capitalized with a $10 million investment from its parent and initially will serve as a specialty commercial insurer. According to management, the company will provide several advantages, which include a source for alternative market products, additional rate filing flexibility and a potential source for raising additional capital long term.

The rating affirmations reflect the group’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The group’s very strong balance sheet strength is supported by improved operating performance derived from underwriting results that outperformed the composite, a high-quality investment portfolio and favorable reserve development trends in most years.

The business profile is fairly diverse across product lines and geographies due to recent expansion efforts. Risk management capabilities are considered appropriate for the risk profile of the group with improved capabilities observed in management’s ability to assess risk tolerance levels.

Partially offsetting these positive rating factors is the group’s exposure to weather-related events, elevated underwriting leverage and above-average reinsurance dependence.

To mitigate the group’s exposure to weather-related events, improved enterprise risk management capabilities in recent years combined with an effective reinsurance program with high quality reinsurers have helped to stabilize operating results.

Source: A.M. Best

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