AM Best Upgrades Credit Ratings of Southern Mutual Church Insurance Company
AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to "a" (Excellent) from "a-" (Excellent) of Southern Mutual Church Insurance Company (SMCIC) (Columbia, SC). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect SMCIC's balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
The rating upgrades reflect improvement in SMCIC's balance sheet strength fundamentals. The company has generated strong operating performance in most years, driving substantial surplus growth. Key drivers of these results include increased rates and deductibles, as well as extensive loss control initiatives. In addition, the reinsurance program has been enhanced to provide greater protection from more frequent and severe catastrophe events. Strong earnings have been consistently generated in recent years despite considerable weather-related losses. Commensurately, SMCIC's risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), has improved significantly under baseline and stress scenarios. The modelled net probable maximum loss for a 1-in-250 all perils combined event remains moderately high at approximately 30% of surplus. SMCIC's business profile continues to be limited, primarily due to a concentration of property risk for churches of various denominations in the Southeast United Staes, a region of the U.S. prone to severe weather events. However, diversification efforts are in effect to reduce the overall exposure.
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