A.M. Best Revises Outlook to Stable for The Brethren Mutual Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has revised the outlook to stable from positive and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of TheBrethren Mutual Insurance Company(Brethren Mutual) (Hagerstown, MD).

Brethren Mutual’s revised outlook reflects its unfavorable underwriting performance in recent years, which has constrained surplus growth and modestly elevated leverage measures. The underwriting losses primarily stemmed from significant weather-related claims activity due to the company’s concentration of business. In addition, Brethren Mutual maintains elevated investment leverage, which exposes its surplus to equity market volatility.

However, Brethren Mutual continues to maintain excellent risk-adjusted capitalization, stemming primarily from its conservative underwriting leverage. Brethren Mutual also maintains a long-standing local market presence and excellent liquidity measures. The ratings also consider the company’s historically strong operating performance prior to 2010, which resulted in strong earnings during years of modest catastrophe activity. In addition, Brethren Mutual’s ratings consider management’s recently implemented initiatives designed to improve underwriting performance.

Factors that could result in future negative rating actions include a continued deterioration in Brethren Mutual’s underwriting performance or a significant erosion of its capital base.

The principal 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 RESERVED.

A.M. Best Co.Frederick DeLeon, 908-439-2200, ext. 5175
Senior Financial Analyst
[email protected]
orRick Decker, 908-439-2200, ext. 5423
Assistant Vice President
[email protected]
orRachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
[email protected]
orJim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Co.