Credit Rating Outlook Changed to Negative for Missouri’s Cameron Mutual Insurance

AM Best revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term ICR of “bb+” (Fair) of Cameron Mutual Insurance Co. (Cameron Mutual) in Cameron, Missouri.

The outlook of the FSR is stable.

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

Cameron Mutual was established in 1892 as the Farmers Mutual Tornado, Cyclone and Windstorm Association of the Third Congressional District at Darlington in Gentry County, Missouri. It currently writes personal, farm, and commercial business in Missouri, Arkansas and Iowa.

The revised Long-Term ICR outlook to negative reflects ongoing surplus erosion from significant underwriting losses that pressures Cameron Mutual’s overall balance sheet strength. The Long-Term ICR outlook further considers underwriting leverage metrics, which nearly double the private passenger standard auto and homeowners composite and the recent trend of adverse loss reserve development.

Cameron Mutual’s marginal operating performance reflects annual underwriting losses, driven by weather-related losses and increased frequency and severity in auto lines, as well as an above average expense ratio due to information technology investments and higher commissions. The limited business profile reflects the company’s geographic concentration in the Midwest region and exposure to severe weather-related losses.

AM Best views Cameron Mutual’s ERM as marginal, as the program has not proven effective in limiting losses and meeting projected results.

Source: AM Best

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