OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has assigned a financial strength rating of A-
(Excellent) and an issuer credit rating of “a-” to Mid-Hudson
Co-Operative Insurance Company (Mid-Hudson) (Montgomery, NY). The
outlook assigned to both ratings is stable.
The ratings reflect Mid-Hudson’s favorable operating performance,
conservative underwriting leverage and long-standing local market
presence. Mid-Hudson’s solid capital position has been derived from
surplus growth generated by positive pre-tax operating income and net
income in each of the last five years. Over this five-year period,
Mid-Hudson recorded a double-digit average pre-tax return on revenue,
driven by profitable underwriting results in most years and supplemented
by net investment income and other income. The company’s average pure
loss and loss plus loss adjustment expense ratios compared very
favorably to the personal property composite averages.
Partially offsetting these positive rating factors is Mid-Hudson’s
geographic concentration of risk in New York State, which exposes its
operating performance to weather-related events, as well as changes in
regulatory and competitive market conditions. Also, the company’s
underwriting expense ratio is above the personal property composite
average, driven in recent years by expenditures on technology.
Additionally, Mid-Hudson’s common stock leverage as a percentage of
policyholder surplus is elevated relative to the composite average. This
exposes surplus to fluctuations in the equity market, as evidenced by a
moderately negative total return in 2008 due to unrealized capital
There could be negative rating pressure on Mid-Hudson's ratings going
forward if its favorable operating performance were to deteriorate or if
risk-adjusted capitalization were to weaken.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include: “Risk
Management and the Rating Process for Insurance Companies”;
“Understanding BCAR for Property/Casualty Insurers”; and “Catastrophe
Analysis in A.M. Best Ratings.” Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Co.Bob PodolskiSenior Financial
Analyst908-439-2200, ext. firstname.lastname@example.orgGary
DavisAssistant Vice President908-439-2200,
MorrowSenior Manager, Public Relations908-439-2200,
PeavyAssistant Vice President, Public Relations908-439-2200,
Source: A.M. Best Co.