AM Best has downgraded the Financial Strength Rating to A-(Excellent) from A (Excellent) and the Long-Term Issuer Credit Ratings to “a-” (Excellent) from “a” (Excellent) of IMT Insurance Company and its affiliate, Wadena Insurance Company. These companies are domiciled in West Des Moines, Iowa. and are collectively referred to as IMT Insurance Companies (IMT). Concurrently, these Credit Ratings (ratings) have been placed under review with negative implications.
The ratings reflect IMT’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
IMT offers personal and commercial insurance products in Illinois, Iowa, Minnesota, Nebraska, South Dakota and Wisconsin.
The rating downgrades consider significant deterioration in IMT’s key balance sheet strength metrics through June 30, 2024, as evidenced by a 30% reduction in the group’s policyholders’ surplus; this subsequently impacted its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The decline in surplus was driven by a higher frequency of severe weather-related events, particularly in April and May.
AM Best said the group has been taking appropriate measures since late 2022 to reduce volatility in future underwriting results. The companies’ management has continued to focus on a return to profitability by improving rate adequacy, implementing exposure management, increasing deductibles, as well as tightening underwriting and its risk appetite. The group’s operating performance remains adequate as AM Best expects appropriate rate increases likely will be earned in the near term.
Further, IMT’s ratings were placed under review with negative implications pending the successful execution of various capital management efforts. AM Best’s expectation is that these strategies will improve the group’s current capital position subject to finalizing terms and regulatory approvals.
The ratings will remain under review until AM Best can properly analyze the group’s rating fundamentals following implementation. However, should the group fail to follow through on these initiatives, or fail to facilitate meaningful improvement in its current risk-adjusted capital position and underwriting results, the ratings may be downgraded further.
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