OLDWICK, NJ–(BUSINESS WIRE)–am the best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) from bb+ (fair) to bb (fair) and the Financial Strength Rating (FSR) from Cameron Mutual Insurance Company (Cameron Auf reciprocity) (Cameron, MO). The FSR outlook has been changed to negative from stable, while the long-term ICR outlook is negative.
The credit ratings reflect Cameron Mutual’s balance sheet strength, which AM Best considers reasonable, its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
The long-term ICR downgrade reflects the ongoing excess erosion that has weakened Cameron Mutual’s overall balance sheet strength. Severe weather events in 2022 resulted in a capital decline of $6.4 million in the first six months. In addition, the decrease in excess impacted the level of risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), which is rated as strong, from very strong at the last review. The long-term ICR downgrade also takes into account underwriting leverage ratios well above the standard personal and homeowner composite. The negative outlook reflects the continued deterioration in the company’s overall balance sheet strength and ongoing unfavorable operating results. Marginal operating performance continues to erode Cameron Mutual’s capital position and creates greater sensitivity to risk-adjusted capitalization as measured by BCAR. As management continues to refine the business profile to reduce risk and correct performance, risk mitigation strategies have yet to become significant.
Cameron Mutual underwrites personal automobile, commercial multi-pyril, farm and homeowners in three states, primarily in Missouri. Management has recently emphasized de-risking the portfolio as it relates to the more volatile segments of the business book, as well as improving valuation algorithms with more granularity and driving rate hikes where necessary.
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