AM Best revised the outlooks to negative from stable and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb” (Good) of Madison-based Wisconsin Reinsurance Corp. (WRC) and 1st Auto & Casualty Insurance Co.(1st Auto), collectively referred to as Wisconsin Reinsurance Group (WRG).
The ratings reflect WRG’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The revised outlooks reflect deterioration in the group’s operating performance largely associated with weather-related events due to its concentration in the Midwest. WRG’s recent performance has been pressured by declining profitability in reinsured business written by client companies, as well as continued weak performance in the direct auto insurance book. Without sustained improvement, this could lead to a decline in the overall assessment of operating performance in the near to intermediate term.
WRG’s maintains strong overall balance sheet strength, supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio.
This position is somewhat offset by surplus declines in three out of the past five years and elevated underwriting leverage metrics relative to the composite. The limited business profile reflects the group’s geographic concentration in the Midwest region, which is partially mitigated through a comprehensive reinsurance program.
ERM is assessed as appropriate for the group’s risk profile, based on a formal ERM policy that includes defined risk appetite and tolerance thresholds with emphasis placed on strong corporate governance.
Established in Wisconsin in 1931, WRC has since expanded into Arkansas, Iowa, Missouri, South Dakota and Illinois. A mutual company, WRC is owned by the clients it reinsures.
Source: AM Best
Topics Trends Reinsurance AM Best Wisconsin
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