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AM Best Assigns Issue Credit Rating to Church Mutual Insurance Company, S.I.’s Surplus Notes; Maintains Under Review With Negative Implications Status for Church Mutual Insurance Group Members

08/23/2024

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has assigned and placed under review with negative implications a Long-Term Issue Credit Rating of bbb+ (Good) to the $40 million, 9.5% surplus notes due 2044 issued by Church Mutual Insurance Company, S.I. Additionally, AM Best has maintained the under review with negative implications status on the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Church Mutual Insurance Company, S.I. and its wholly owned subsidiaries, CM Regent Insurance Company and CM Vantage Specialty Insurance Company. All companies are domiciled in Merrill, WI, and collectively referred to as Church Mutual Insurance Group (Church Mutual).

The Credit Ratings (ratings) of Church Mutual were initially placed under review with negative implications in March 2024 following material erosion in surplus and risk-adjusted capitalization. Through the first half of 2024, the company has implemented several strategies to partially replenish capital. As a result, surplus increased by $95 million through the reorganization of its corporate structure for efficiency, shifting approximately $60 million under the operating unit, as well as down-streaming $30 million from the holding company, which also benefited the treatment of nonadmitted assets. As noted, the issuance of the $40 million surplus note in the third quarter of 2024 further increased surplus. Additional capital management strategies are being contemplated along with various de-risking efforts. The company is targeting unfavorable risks in its portfolio by tightening underwriting guidelines, including non-renewals, particularly on wind exposures, large accounts and long-tail lines. The company continues to push rate increases upon renewals across its property, auto and liability lines of business. Nevertheless, adverse reserve development on the group’s long-tail lines remains a rating concern as it is contributing to underwriting volatility. Should anticipated improvement and execution in communicated plans not materialize, the ratings likely will be downgraded.

The ratings will remain under review with negative implications in the near term while the group completes its action plans and AM Best further evaluates the prospective impact of the corrective actions.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Quentin Harris
Senior Financial Analyst
+1 908 882 1816
quentin.harris@ambest.com

Christopher Draghi
Director
+ 1 908 882 1749
chris.draghi@ambest.com

Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310
christopher.sharkey@ambest.com

Al Slavin
Senior Public Relations Specialist
+1 908 882 2318
al.slavin@ambest.com

Source: AM Best

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