A.M. Best Upgrades Ratings of MMG Insurance Company

A.M. Best has upgraded the financial strength rating (FSR) to A (Excellent) from A- (Excellent) and the issuer credit rating to "a" from "a-" of MMG Insurance Company (MMG) (Presque Isle, ME).

The outlook for both ratings has been revised to stable from positive.

The rating actions reflect MMG's historically strong operating performance, consistent growth in surplus and solid risk-adjusted capitalization in recent years. In addition, the company continues to maintain its market position as a leading personal and small commercial lines writer in the northern New England states. MMG's strong operating performance is derived from management's disciplined underwriting style; profitability initiatives, which include appropriate pricing strategies; continuous use of inspections; and enhancements to its technological platforms, including extensive use of analytics. MMG's operating performance consistently outperforms its peer group, which is included in the composite, and it has maintained solid risk-adjusted capitalization over several years. The company's consistent surplus growth has been driven by management's strict underwriting discipline that has resulted in strong operating income as well as steady investment income generated by a high quality bond portfolio. In addition, the liquidity ratios continue to remain higher than the composite due to consistent cash flows from operations.

Partially offsetting these positive rating factors is MMG's geographic concentration of business in the northern New England states. The company's increased commercial and Pennsylvania writings have provided some product and geographic diversification; however, this does create somewhat greater property catastrophe risk. Nevertheless, MMG continues to maintain an effective reinsurance program, which helps mitigate the effects of severe weather-related events.

MMG's ratings could further benefit from producing a consistent trend of above average earnings while broadening its business profile and maintaining strong risk-adjusted capitalization. However, the company's ratings and outlook may come under negative pressure if an unfavorable earnings trend develops and/or its capital materially deteriorates.

More information:

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