A.M. Best Reaffirms Companies’ A Minus (Excellent) Rating
May 5, 2011A.M. Best Co., the financial services company, on May 5, 2011 reaffirmed the A Minus (excellent) financial strength rating of all three of the Union Mutual of Vermont Companies, giving them all a stable outlook.
Best said that the rating of Union Mutual Fire Insurance Company and New England Guaranty Insurance Company, Inc. reflects the group's "strong risk-adjusted capitalization, favorable loss experience in its leading lines of business and its established market presence where it maintains long-term agency relationships. Offsetting these positive rating factors are the group's limited geographic diversification and susceptibility to significant weather-related events, as well as its relatively high operating expense structure driven primarily by commissions."
Best went on to state that "the group's solid risk-adjusted capital position is supported by a conservative fixed-income portfolio, consistent reserving philosophy and proceeds from the issuance of a surplus note. Although profitability declined in three of the past five years, Union Mutual reported favorable operating income, in total, over the period due to steady investment income, re-underwriting actions, revised rates and exposure mitigation as part of its enterprise risk management. With these strategies in place and management's continued underwriting discipline, more consistent profitability is anticipated to return while maintaining solid risk-adjusted capitalization."