The A.M. Best financial rating firm has downgraded the financial strength rating of the Alabama Municipal Insurance Corp., citing weather losses as well as law enforcement liability costs.
“AMIC’s law enforcement liability segment has been impacted by claims going to federal court, which prevents the application of state tort caps and comes with greater defense costs, as well as social trends pertaining to law enforcement,” A.M. Best said in a statement late last week.
The rating firm cut the mutual insurance firm’s strength rating from “A- Excellent” to “B++ Good,” and downgraded the long-term credit rating by a similar score.
The Montgomery-based corporation has raised premiums significantly in recent months and has promoted law officer training, better awareness in the judicial system, and “more refined reviews of insureds,” A.M. Best noted.
“However, initiatives have yet to gain traction as illustrated by results that no longer outpace the composite averages,” Best’s news release reads.
AMIC, formed in 1983, includes 392 municipalities and more than 120 utility and water authority boards. Charles Murphy, mayor of Robertsdale, is chairman.
The rating statement did not explain what law enforcement incidents or social media actions may have led to lawsuits. But a number of Alabama municipalities have faced legal actions in recent years: A lawsuit early this year charged that police in the town of Brookside left a man naked in a frigid cell and drew his blood against his wishes, according to local news repots. Brookside’s police department has been the defendant in several other suits.
In Walker County, a family filed suit in March after they claimed Anthony Mitchell was deprived of water for 70 hours before he died in custody, news outlets have reported. The man may also have been shut in a walk-in freezer and froze to death, the federal suit contends.
A black minister filed suit last year after he was arrested while watering his neighbor’s flowers in Childersburg, Alabama. And in Geneva, Alabama, police were sued after a man died of an apparent heart attack while in custody, according to news reports.
Besides the law enforcement liability costs, Best noted that AMIC’s operating performance has also been hurt by an increase in property losses, thanks to weather events and higher material costs from inflation. Alabama cities have seen several tornadoes in the the past few years.
“Furthermore, adjustments to the company’s annual aggregate deductible programs led to greater retained property losses in recent years,” the release said. Further details were not available.
The insurance pool’s credit rating was impacted by a “continued erosion in the capital position and loss reserve development trends.” Risk-adjusted capitalization, along with underwriting leverage and liquidity remain in favorable positions.
“The company benefits from a strong presence in its niche market utilizing a well-established distribution network leveraging both internal and external channels,” and has a robust reinsurance program, Best said.
Photo: Leighea Johnson looks over what is left of her home after a tornado that ripped through central Alabama in January 2023. (AP Photo/Butch Dill)
Topics Law Enforcement AM Best Alabama
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