AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb” (Fair) from “bb+” (Fair) and affirmed the Financial Strength Rating (FSR) of B (Fair) of Cameron Mutual Insurance Company (Cameron Mutual) (Cameron, MO). The outlook of the FSR has been revised to negative from stable while the outlook of the Long-Term ICR is negative.
The Credit Ratings (ratings) reflect Cameron Mutual’s balance sheet strength, which AM Best assesses as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
The Long-Term ICR downgrade reflects ongoing surplus erosion, which has weakened Cameron Mutual’s overall balance sheet strength. Severe weather events in 2022 drove the $6.4 million decline in capital through the first six months. Furthermore, the surplus decline influenced the level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is assessed as strong, from very strong at last review. The downgrade of the Long-Term ICR further considers underwriting leverage metrics that are well-above the private passenger standard auto and homeowners composite. The negative outlooks reflect ongoing deterioration in the company’s overall balance sheet strength and consistently unfavorable operating results. Marginal operating performance continues to erode Cameron Mutual’s capital position, creating greater sensitivity in risk-adjusted capitalization, as measured by BCAR. Furthermore, while management continues to refine the business profile in an effort to reduce exposures and correct performance, risk mitigation strategies have yet to gain material traction.
Cameron Mutual writes personal auto, commercial multi-peril, farmowners and homeowners in three states, primarily Missouri. Management has recently emphasized de-risking the portfolio as it relates to the more volatile segments of the book of business, as well as improving rating algorithms with more granularity and pushing rate increases where needed.
Source: AM Best
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