AM Best Revises Outlook to Negative for Michigan’s Hastings

AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of Hastings Insurance Company based in Hastings, Michigan.

The outlook of the FSR is stable. The Credit Ratings (ratings) reflect Hastings’ balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The revised outlook to negative from stable for the Long-Term ICR reflects the ongoing pressure given the volatility in the company’s operating results in recent years, due to an abnormal level of catastrophe losses in operating states in the Midwest. Hastings’ operating performance in recent years and through September 2024, were challenged by higher-than-expected frequency and severity of weather-related events.

Consequently, Hastings has seen a combined ratio above breakeven in recent years. The volatility in the company’s results continued through third-quarter 2024, and was fueled by the severity of weather-related losses driven by inflationary pressures. Hastings has a long-standing presence in its operating territories in the Midwest and an experienced management team. However, the company remains susceptible to frequent and severe weather-related losses and potentially regulatory, as well as economic challenges.

Hastings’ management is addressing the underwriting volatility through rate increases, re-underwriting of its book of business, inflation guard adjustments, non-renewing unprofitable accounts and in-depth loss control inspections. AM Best expects that these actions will take time to reverse the negative trends and for the metrics to return to its historical norms; however, given the absence of sustained improvements, there could be further negative ratings action.