AM Best Places Church Mutual Insurance Group members’ credit ratings are being reviewed with negative consequences

AM Best Places Church Mutual Insurance Group members’ credit ratings are being reviewed with negative consequences

ALDUICK, NJ March 15, 2024—(BUSINESS WIRE)–AM Best has placed on negative review the financial strength rating of A (Excellent) and the long-term issuer credit rating of ‘a’ (Excellent) of Church Mutual Insurance Company, SI and its wholly owned subsidiaries, CM Regent Insurance Company and CM Specialized Vantage Insurance Company All companies are located in Merrill, Wisconsin and are collectively known as Church Mutual Insurance Group (Church Mutual).

Church Mutual’s credit ratings (ratings) were placed on negative impact review following a material erosion of surplus and risk-adjusted capital as measured by Best’s capital adequacy ratio (BCAR). The excess erosion was primarily a function of significant loss reserve development related to time losses, liability losses and defense costs, particularly as litigation and social inflation affected results. Performance was also impacted by storm losses in the current accident year and the increased burden of loss costs amid inflation and supply chain issues. Church Mutual is pursuing several capital management strategies to improve its capital position, including capital contributions in the near term, while engaging in reinsurance and surplus relief options. The group is also making changes to its insurance profile to reduce exposure to business lines that have contributed to underwriting and reserve volatility.

Nevertheless, the potential for future development of the provision for unfavorable losses remains a concern for the rating. The plans are expected to materialize and be implemented in the near future. In the absence of sufficient expected improvement and implementation of the mentioned plans, the ratings are likely to be downgraded.

The ratings will remain under review with negative implications as the group’s capital management strategies are implemented and AM Best analyzes the impact of such actions. Given the degree of capital erosion, negative rating action remains possible.

This press release refers to the credit ratings that are published on the AM Best website. For all rating information relating to the release and relevant disclosures, including details of the agency responsible for issuing each of the individual ratings set out in this release, please see AM Best’s Recent assessment activity Web page. For additional information on the use and limitations of credit score opinions, please see Guide to Best Credit Ratings. For information on the proper use of Best’s credit ratings, Best’s performance ratings, Best’s preliminary credit ratings, and AM Best’s press releases, see A guide to the proper use of Best’s ratings and reviews.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information visit www.ambest.com.

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Contacts

Quentin Harris
Senior Financial Analyst
+1 908 882 1816
[email protected]

Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
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Christopher Draghi
Director
+ 1 908 882 1749
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Al Slavin
Senior Public Relations Specialist
+1 908 882 2318
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