AM Best Withdraws Credit Ratings of Members of Wisconsin County Mutual Group

AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb” of Community Insurance Corporation and Wisconsin County Mutual Insurance Corp., both domiciled in Madison, Wisconsin. They are collectively referred to as the Wisconsin County Mutual Group (WCMG). The outlook of the ratings remains negative.

Concurrently, AM Best has withdrawn the ratings of WCMG at the company’s request to no longer participate in AM Best’s interactive rating process.

The ratings reflect WCMG’s balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).

WCMG’s balance sheet reflects a strong level of risk-adjusted capitalization, relatively conservative underwriting leverage and a high-quality investment portfolio that generates consistent net investment earnings year-over-year.

Partially offsetting these positive rating factors is the ongoing payment of policyholder dividends, which have constrained surplus growth, and moderately unfavorable loss reserving trends, which has put pressure on the current balance sheet assessment.

Marginal operating performance is illustrated by an elevated combined ratio, which compares unfavorably with the commercial casualty composite, as well as negative pre-tax and total operating returns over the recent five-year period. Underwriting results have been affected by lawsuit verdicts on several prior-year other liability and workers’ compensation claims along with loss and loss adjustment expenses (LAE) adverse loss reserve development.

While the pure loss ratio remains favorable as compared with its peer composite, significant legal defense expenses associated with civil rights cases have elevated the LAE ratio, which continue to impact the combined ratio.

WCMG maintains a limited business profile reflective of its geographical concentration in Wisconsin, as well as judicial and regulatory risks associated with federal judicial decisions with unlimited tort caps. The group’s top lines of business include workers’ compensation, other liability and commercial auto liability.

Currently, the group’s ERM program is appropriate; however, certain key elements have proven inadequate given the continued volatility in underwriting results. Additionally, the group has material terrorism exposure in the event that the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) is not renewed, albeit a contingency plan is in place.

WCMG is owned by the counties that participate in its insurance programs, according to information posted on its website.

Source: AM Best

Note: AM Best declined to say why WCMG requested to withdraw from the ratings process. The Wisconsin Counties Association, which provides corporate management for the group, did not respond to a request for more information.

Topics AM Best Wisconsin