AM Best Assigns Credit Ratings to Mutual Insurance Company Limited

Business Wire

HAMILTON, Bermuda--(BUSINESS WIRE)-- AM Best has assigned the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” to Mutual Insurance Company Limited (MIC) (Hamilton, Bermuda). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings of MIC reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

MIC’s balance sheet strength assessment reflects its risk-adjusted capitalization, which is categorized as strongest, as measured by Best’s Capital Adequacy Ratio (BCAR). Balance sheet strength is supported further by a conservative investment portfolio that has produced consistent investment income and consistent favorable loss reserve development. However, MIC does expect surplus to decline in 2019, driven by technological investments and other expenses.

MIC has been operational for nearly 60 years and primarily writes media liability and professional liability coverages throughout North America and the Caribbean. The company has experienced volatility in its underwriting performance in recent years, and its expense ratio is elevated relative to peers due to the commission costs of media liability business, and more recently, investment expenses to expand the organization. Despite the recent underwriting challenges, with the exception of 2017, the company has generated operating profits, supporting the adequate operating performance assessment. The company’s expense structure is expected to improve prospectively with new product offerings and corresponding premium growth, which should improve underwriting performance. In addition, MIC, which has established risk tolerance and appetite statements, is further developing additional risk controls and processes to support the organization’s recently enhanced risk profile. Nonetheless, there is execution risk surrounding the implementation of a new business plan.

Negative rating action could occur if risk-adjusted capitalization declines due to poor underwriting results or if performance is not in line with the business plan.

MIC’s CEO Joanne Richardson commented, “On behalf of MIC’s management team and Board, we are excited to have AM Best validate our financial strength and business plans as we move forward. The A- (Excellent) Rating will strengthen our marketing efforts as we expand our product offering into all area of media liability, including but not limited to digital and print publishers, broadcasters, advertisers and entertainment E&O."