A.M. Best Revises Outlooks to Negative for California Mutual Insurance Co.
A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of California Mutual Insurance Co.
The negative outlooks are based on California Mutual’s unfavorable five-year and 10-year underwriting results and pre-tax operating returns relative to industry norms and their deterioration in recent years, which fell short of expectations, according to A.M. Best.
The rating affirmations reflect California Mutual’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The company’s strong balance sheet is driven by low underwriting leverage, strong liquidity measures, favorable loss reserve development and a conservative investment risk profile. The company’s fluctuating, but currently adequate, operating performance has been driven by consistent total investment returns, which have partially mitigated fluctuating underwriting performance, A.M. Best said.