AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” (Excellent) from “a+” (Excellent) and affirmed the Financial Strength Rating (FSR) of A (Excellent) of Shelter Mutual Insurance Company (Shelter Mutual) (Columbia, MO) and its property/casualty (P/C) subsidiaries (collectively referred to as Shelter).
Concurrently, AM Best has downgraded the Long-Term ICR to “a” (Excellent) from “a+” (Excellent) and affirmed the FSR of A (Excellent) of Shelter Life Insurance Company (Shelter Life) (Columbia, MO), which is a wholly owned subsidiary of Shelter Mutual. The outlook of the Long-Term ICRs have been revised to stable from negative while the outlook of the FSRs is stable. (Please see below for a detailed listing of the P/C companies and ratings.)
The Credit Ratings (ratings) of Shelter reflect its balance sheet strength, which AM Best assesses as strongest, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The Long-Term ICR downgrades for Shelter reflect underwriting performance that has fallen below that of its peer companies. These underwriting losses have resulted from several weather-related events, particularly in states where Shelter a high geographic concentration.
The weather-related losses from hurricanes and winter storms have put pressure on the group’s operating performance assessment with five consecutive years of underwriting losses, and three consecutive years of operating losses. Offsetting these losses is the group’s reinsurance book of business, which has recently become more profitable.
The company continues to execute on strategic plans to return to profitability, which includes taking significant rate increases that have already begun to earn through. While underwriting ratios are expected to improve, it is not likely to result in a return to underwriting profitability in the near-term. Despite the underwriting losses, the group’s balance sheet strength continues to be assessed at the strongest level supported by the strongest risk-adjusted capital position, as measured by Best’s Capital Adequacy Ratio (BCAR).
The Long-Term ICRs have been downgraded to “a” (Excellent) from “a+” (Excellent) and the FSR of A (Excellent) have been affirmed, with the outlook for the Long-Term ICRs revised to stable from negative and the outlook of the FSR at stable for the following P/C subsidiaries of Shelter Mutual Insurance Company:
- Haulers Insurance Company, Inc.
- Shelter General Insurance Company
- Shelter Reinsurance Company
- AmShield Insurance Company
Topics AM Best
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