A.M. Best Revises Outlooks to Negative for Wisconsin Municipal Mutual Insurance

July 26, 2018

A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” for Wisconsin Municipal Mutual Insurance Co. (WMMIC) in Madison, Wisconsin.

The company provides insurance and related products and services to municipalities throughout Wisconsin. According to information provided in the company’s 2017 annual report, it had 20 public entity members in 2017.

WMMIC provides general liability, auto, and public officials’ errors and omissions liability. Also available to most members are workers’ compensation claims administration services (as a TPA), a workers’ compensation excess program, and a cyber liability program. While all Wisconsin public agencies are eligible for membership in the mutual insurer, the company reports that it is selective in its marketing. It began operations in November 1987.

A.M. Best said the ratings reflect WMMIC’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

These positive rating factors are derived from the company’s modest underwriting leverage, adequate operating performance, long-standing relationships with its municipal and county member/insureds and emphasis on loss control efforts as part of its overall ERM. Other positive factors supporting the ratings include WMMIC’s conservative investment portfolio comprised of highly rated bonds and overall operating strategy.

The negative outlooks reflect reported operating losses and adverse trend in underwriting results over the past three years resulting in declines in policyholder surplus. The operating losses were due to unfavorable underwriting results driven by adverse loss reserve development on several large liability claims. Nonetheless, a prudent reinsurance program and an emphasis on loss control have mitigated the frequency and severity of these exposures.

While WMMIC has successfully attracted and retained its member/insureds through profit sharing via policyholder dividends, it has led to negative return measures and significantly elevated combined and operating ratios. In the latest five-year period, policyholder dividends have averaged approximately 53 points to the company’s combined ratio. Further, WMMIC has a limited business profile due to its limited pool of potential policyholders, product offerings and geography.

Source: A.M. Best

Topics Trends AM Best Wisconsin Policyholder

Was this article valuable?

Here are more articles you may enjoy.