A.M. Best Co. has removed from under review with negative implications and affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of Michigan Insurance Co. based in Grand Rapids, Mich. The outlook assigned to both ratings is stable.
The rating actions follow the recent acquisition of MIC by Donegal Group Inc. The ratings are reflective of MIC’s strong capitalization, historically positive earnings and the implicit and explicit support provided by Donegal, the rating company said. This includes board control, management oversight, system improvements and capital support through a surplus note and intercompany reinsurance protection provided by Donegal Mutual Insurance Co, the lead company in the Donegal Insurance Group.
These favorable rating aspects are partially offset by MIC’s concentration of risk in Michigan, which exposes it to weather-related losses, regional economic conditions and changes in regulatory and legislative actions. The outlook on the ratings is stable as the capitalization and historical earnings trend of MIC are expected to continue with the added support of Donegal, A.M. Best said.
Additionally, the acquisition of MIC has no impact on the ratings of Donegal Group Inc. or the Donegal Insurance Group. Although the acquisition was funded by drawing down on existing lines of credit, Donegal Group Inc.’s debt-to-capital and interest coverage ratios remain within an acceptable range for its current rating, A.M. Best said.
Source: A.M. Best
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