Global ratings agency, AM Best, has downgraded the Long-term Issuer Credit Rating to “a” (Excellent) from “a+” (Excellent) and affirmed the Financial Strength Rating (FSR) of A (Excellent) of Employers Mutual Casualty Company (EMCC) (Des Moines, IA), as well as its five property & casualty subsidiaries – collectively referred to as EMC Insurance Companies – which operate under an intercompany pooling agreement led by EMCC.
At the same time, Best has also affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of EMC National Life Company (EMCNL).
The outlook of these ratings is stable.
EMCC and its subsidiaries are domiciled in Des Moines, IA, except for Dakota Fire Insurance Company, which is domiciled in Bismarck, ND.
Best stated that the ratings of EMC Insurance Companies reflect the group’s balance sheet strength, which the agency assesses as very strong.
The ratings also reflects the group’s adequate operating performance, neutral business profile and appropriate ERM.
Moreover, the downgrade of the Long Term ICR reflects the change in Best’s assessment of the group’s balance sheet strength, to the very strong level from strongest, as it has struggled to maintain its surplus position due to underwriting losses and variability in the investment portfolio over the most recent five-year period.
However, the group does continue to maintain a competitive position within the commercial lines space in its geographic footprint, mostly across the Midwest.
It is also important to note that EMC Insurance Companies’ operating results have been challenged in recent years.
This is mostly due to numerous significant catastrophe events, as well as other frequent and cumulative weather events.
Streamlining of product offerings, additional scrutiny in underwriting, and significant rate increases are intended to improve consistency in the group’s operating results over the near-term, Best noted.
Meanwhile, the ratings of EMCNL reflect its balance sheet strength, which Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate ERM.
In addition, Best noted that the ratings of EMCNL also reflect its strategic importance to its parent, EMCC, represented by its diversified product profile of life, annuity and workplace products available through multiple distribution sources.
The Long-Term ICRs has been downgraded to “a” (Excellent) from “a+” (Excellent) and the FSR of A (Excellent) affirmed with stable outlooks for EMCC and its following P&C subsidiaries.
These businesses are all part of an intercompany pooling agreement, whereby all premiums, losses and expenses are shared proportionally based on their stated pooling participation.
These include:
- Dakota Fire Insurance Company
- EMC Property & Casualty Company
- EMCASCO Insurance Company
- Illinois EMCASCO Insurance Company
- Union Insurance Company of Providence
