AM Best Assigns Credit Ratings to Michigan’s Manufacturing Technology Mutual

AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Manufacturing Technology Mutual Insurance Company based in Novi, Michigan. The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect MTM’s balance sheet strength, which AM assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

MTM’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is assessed at the strongest level, where AM Best expects it to remain in future years. The balance sheet assessment also considers the company’s low reinsurance dependence and consistently favorable reserve development.

MTM has generated an adequate level of operating performance with most five-year operating results outperforming the workers’ compensation (WC) composite. The company’s operating results are distorted due to the significant policyholder dividends the company pays with dividends over the past five-years amounting to $22.9 million, which represented over 60% of the company’s policyholder surplus as of December 2021.

However, these dividends support strong retention from MTM’s policyholders. MTM has limited business diversification as a mono-line WC insurer with geographic concentration and customer concentration. The company is licensed only in Michigan and underwrites primarily manufacturing entities, printing operations, hardware stores and automotive dealerships. This leaves the company susceptible to potential judicial, legislative or regulatory changes in the WC market in Michigan. MTM’s risk-management capabilities are considered appropriate for the company’s risk profile.

Source: AM Best

Topics Tech Michigan AM Best Manufacturing