AM Best announced it has withdrawn credit ratings of Mt. Morris Mutual Insurance Company in Coloma, Wisconsin, less than a week after the credit rating agency downgraded the company’s ratings.
AM Best said it withdrawn Mt. Morris’ ratings as the company has requested to no longer participate in AM Best’s interactive rating process.
In a July 19 release, AM Best said it had downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” (Good) from “bbb+” (Good) and affirmed the Financial Strength Rating of B++ (Good) of Mt. Morris. AM Best maintained the under review status for these Credit Ratings (ratings) and revised the implication status to negative from developing.
AM Best said the rating downgrade “considers volatility in Mt. Morris’ key operating performance metrics throughout the past several years, driven by weather-related loss activity along with the impact of inflation on rising loss costs.”
Founded in 1875, Mt. Morris provides farm, home, auto, specialty and business insurance. According to Mt. Morris’ website, the mutual began writing business statewide in 1997.
AM Best originally placed Mt. Morris under review with developing implications in December of 2023, pending AM Best’s ability to thoroughly assess the financial and operational impacts of several mergers and acquisitions transactions on Mt. Morris’ rating fundamentals.
Effective Jan. 1, 2024, Mt. Morris executed five merger agreements and four affiliation agreements with town mutual insurers in its domiciled state of Wisconsin, according to AM Best. The mergers expanded Mt. Morris’ spread of risk and overall exposure base within the state, the credit rating agency said.
Mt. Morris reported three consecutive years of negative net income in its financial report shared with the NAIC. In 2021, the company had net income of -$201,000, followed by -$1.22 million in 2022 and -$5.12 million in 2023.
“Consequently, the company’s combined and operating ratios have been increasing gradually over the most recent three-year period, which has impacted its five-year average metrics adversely,” AM Best said.
Mt. Morris had approximately $52 million in assets for FY 2023, with $33 million in liabilities and $18.8 million in capital and surplus.
Mt. Morris’ top line of business in 2023 was farmowners multi peril with $14.6 million, followed by homeowners with $9 million.
Management continues to address this volatility by increasing rates rate increases, refining underwriting guidelines, and reducing its risk exposures in certain lines of business to support growth in historically profitable lines of business, all of which are expected to promote stabilization in results, AM Best said.
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