OLDWICK, N.J., June 21, 2011—A.M. Best Co. has revised the outlook to positive from stable and affirmed the issuer credit rating (ICR) of “a” of Ohio Mutual Insurance Group (OMIG) and its members. A.M. Best also has affirmed the financial strength rating (FSR) of A (Excellent) of OMIG, which includes three intercompany pool members, Ohio Mutual Insurance Company and its wholly owned subsidiary United Ohio Insurance Company, both domiciled in Bucyrus, OH, and Casco Indemnity Company (Saco, ME). The outlook for the FSR remains stable.
The revised ICR outlook reflects the group’s controlled profitable growth and favorable operating returns relative to private passenger automobile and homeowners industry composite.
The rating affirmations reflect OMIG’s strong risk-adjusted capitalization, long-term operating profitability and conservative operating strategy as evidenced by its consistently favorable loss reserve development and positive net underwriting income over the past several years. OMIG’s capitalization benefits from moderate underwriting leverage and a steady stream of net investment income generated by its high-quality fixed-income investment portfolio. As a result, favorable pre-tax operating gains and surplus growth have been reported for five consecutive years despite the financial crisis of 2008 and the sharp increase of weather-related events. The rating affirmations further acknowledge the group’s long-term agency relationships, improved technology platform and prudent catastrophe risk mitigation strategies.
Partially offsetting these positive rating factors is the group’s susceptibility to frequent and severe weather-related events as observed through the first five months of 2011. However, these exposures are managed and mitigated through a comprehensive reinsurance program. Despite increased storm activity and challenging market conditions, OMIG’s capital position remains strong.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies” and “Rating Members of Insurance Groups.” Methodologies can be found at www.ambest.com/ratings/methodology.
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