AM Best Revises Outlooks to Stable for PEMCO Mutual Insurance Company
AM Best has revised the outlooks to stable from positive and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of "bbb+" (Good) of PEMCO Mutual Insurance Company (PEMCO) (Seattle, WA).
The ratings reflect PEMCO's balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The revised outlooks reflect a deterioration in underwriting and operating performance in recent years. Despite an improvement in operating performance in years preceding 2021, more recent periods have seen a resurgence of negative trends, resulting in underwriting and net losses. While the company has been challenged by higher loss severity and increased frequency as compared with pandemic lows, PEMCO has implemented several underwriting initiatives in an effort to return to profitability, including pursuing rate adequacy and adjusting underwriting rules.
PEMCO's very strong balance sheet is supported by risk-adjusted capital at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), and moderate underwriting leverage measures, somewhat offset by historically adverse loss reserve development. The neutral business profile assessment reflects its long-standing market presence in the Pacific Northwest and multichannel distribution platform. AM Best considers PEMCO's ERM to be appropriate for the risk profile of the oranization.
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