A.M. Best Revises Outlook to Stable for Ratings of State Mutual Insurance Company
Business Wire, Inc. |
The revised outlook reflects State Mutual’s considerably improved risk-adjusted capitalization primarily due to its entering into two reinsurance agreements on an older ordinary life block of business during 2011. Additionally, the company will benefit from realized capital gains taken from its bond portfolio tied to the reinsurance agreements. Furthermore, the stable outlook acknowledges the company’s ongoing execution of its long-term business plan and improved performance of its mortgage loan portfolio.
While State Mutual’s capitalization is adequate at this time, A.M. Best’s remains concerned about its exposure to real estate related investments and its declining premium income. Although the amount of real estate related holdings within its investment portfolio has been reduced in recent years, these holdings remain high at approximately 140% of total surplus, particularly high for a company of State Mutual’s size.
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: “Understanding BCAR for Life/Health Insurers” and “Risk Management and the Rating Process for Insurance Companies.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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Copyright: | Copyright Business Wire 2012 |
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