AM Best has placed under review with negative implications the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of Oregon Mutual Insurance Co. and Western Protectors Insurance Co., which are domiciled in McMinnville, Oregon and collectively referred to as Oregon Mutual Group.
The ratings have been placed under review with negative implications following Oregon Mutual Group’s surplus erosion through the first half of 2024.
“The loss of capital negatively impacted the group’s risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR) placing material pressure on its overall balance sheet strength assessment,” AM Best stated. “The group is actively pursuing capital solutions, which include, but are not limited to a reinsurance agreement and a material capital infusion. The expectation is that these actions will be completed and will improve risk-adjusted capitalization in the near term.”
The decline in surplus was driven by underwriting losses stemming from adverse loss reserve development, inclusive of personal lines business, which the group has exited, according to AM Best.
AM Best said the ratings will remain under review with negative implications while the ratings agency monitors the status of the initiatives and it reviews the impact once completed.
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