|[January 11, 2013]
A.M. Best Upgrades Ratings of Mt. Morris Mutual Insurance Company
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has upgraded the financial strength rating (FSR) to
B+ (Good) from B (Fair) and the issuer credit rating (ICR) to "bbb-"
from "bb+" of Mt. Morris Mutual Insurance Company (MMIC) (Coloma,
WI). The outlook for ICR has been revised to stable from negative, while
the outlook for the FSR is stable.
The rating actions reflect MMIC's improved risk-adjusted capitalization,
strengthened policyholders' surplus and operating income, which resulted
from a correction of a significant accounting error relating to
reinsurance recoverables. The ratings also reflect the company's
positive operating performance over the latest five-year period, which
resulted from a steady stream of investment income that offset
underwriting losses. MMIC also benefits from a long-standing local
market presence and strong agency relationships, which have developed
over the course of its 137-year history.
The ratings reflect changes that MMIC's management has implemented to
its internal controls to obviate reoccurrence of this accounting rror.
Additionally, the company has implemented several strategies designed to
improve underwriting results, including rate level adjustments, exposure
mitigation activities and more refined underwriting techniques.
Furthermore, MMIC has revised its investment strategy to reduce its
equity holdings in an effort to insulate policyholders' surplus from
future equity market volatility.
Partly offsetting these positive rating factors are MMIC's elevated
underwriting and investment leverage, limited product diversification
and geographic concentration of risks in Wisconsin. This single-state
concentration exposes the company to competitive market conditions,
frequent and severe weather-related events and potential judicial and
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include: "Risk
Management and the Rating Process for Insurance Companies";
"Understanding BCAR for Property/Casualty Insurers"; and "Catastrophe
Analysis in A.M. Best Ratings." Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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