A.M. Best: Outlook Stable for Wisconsin Mutual Insurance

A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Wisconsin Mutual Insurance Co. (WMIC), based in Madison.

The ratings reflect WMIC’s solid capitalization, favorable balance sheet liquidity, stable loss-reserve development and generally positive operating cash flows. Best said. The ratings and outlook recognize WMIC’s generally improved operating performance and return to underwriting profitability over the past several years as a result of fewer severe storm losses and management actions to improve earnings.

Partially offsetting these positive rating factors is WMIC’s concentration of personal lines business in a single state that exposes it to frequent and severe weather-related events, regulatory changes and potentially adverse judicial actions. This concentration risk was evident in 2010 and 2011 when widespread hail storms and frequent wind events resulted in operating losses and declines in policyholders’ surplus and risk-adjusted capitalization. Additionally, an adverse judicial decision resulted in an extra-contractual settlement in 2010 that contributed to underwriting losses.

A.M. Best believes that the current ratings and outlook are reflective of WMI’s overall profile and does not anticipate any positive rating actions over the intermediate term. Future negative rating actions and/or an outlook revision may occur if negative operating trends return that cause a decline in policyholders’ surplus and risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio.

Source: A.M. Best