OLDWICK, NJ–(BUSINESS WIRE)–AM Best downgraded the issuer’s long-term credit rating (long-term ICR) from ‘bb’ (passable) to ‘bb’ (passable) and affirmed Cameron’s financial strength rating (FSR) of B (passable) Mutual Insurance Company (Cameron Mutual) (Cameron, MO). The outlook for the FSR has been revised from stable to negative, while the outlook for the long-term ICR is negative.
The credit ratings (ratings) reflect Cameron Mutual’s balance sheet strength, which AM Best assesses as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
The deterioration in the long-term ICR reflects the continued erosion of surpluses, which has weakened the overall strength of Cameron Mutual’s balance sheet. Severe weather events in 2022 resulted in a capital decline of $6.4 million in the first six months. In addition, the decline in surpluses has influenced the level of risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), which is assessed as strong, compared to very strong at the last review. The long-term ICR downgrade further takes into account underwriting leverage metrics that are well above the standard composite of private passenger cars and owners. The negative outlook reflects the continued deterioration in the overall strength of the company’s balance sheet and continued unfavorable operating results. Marginal operating performance continues to erode Cameron Mutual’s capital position, creating greater sensitivity in risk-adjusted capitalization, as measured by BCAR. Additionally, as management continues to refine the company’s profile in an effort to reduce exposures and correct performance, risk mitigation strategies have yet to gain traction.
Cameron Mutual writes personal auto, commercial property and casualty, homeowners and homeowners in three states, primarily Missouri. Management has recently focused on de-risking the portfolio with respect to the most volatile segments of business volume, as well as improving scoring algorithms with more granularity and rate increases if necessary.
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