A.M. Best has removed from under review with negative implications and downgraded the long-term issuer credit ratings from “aa” to “aa-” and affirmed the financial strength rating of “A+ (Superior)” of Amica Mutual Insurance and its wholly-owned subsidiary, Amica Property and Casualty Insurance (Amica).
The financial strength rating of “A+ (Superior)” and the long-term issuer credit rating of “aa-” of Amica Life Insurance, another wholly-owned subsidiary of Amica Mutual, were also affirmed.
The outlook of these ratings is stable.
The ratings of Amica had been placed under review with negative implications on 13 October 2017, but following an analysis of Amica under the updated Best’s Credit Rating Methodology this has now been removed.
According to the ratings agency, Amica’s ratings are reflective of its balance sheet strength, categorised as strongest, in addition to its adequate operating performance, favourable business profile and appropriate enterprise risk management.
The downgraded ratings reflect the declining underwriting results in recent years, mainly due to weather-related catastrophe events and auto losses.
Also attributing to the rating actions, is Amica’s risk-adjusted capitalisation being at the strongest level, low underwriting leverage, strong liquidity.
Amica benefits from a favourable business profile, its diverse product offerings, its reputation for outstanding customer service, low-cost structure as a direct writer, and its experienced senior management.
Amica Life’s ratings are a response to its balance sheet strength and risk-adjusted capitalisation, both categorised as strongest, as well as its good liquidity, lack of debt and strong reserve adequacy–a result of the company’s choice not to use captive reinsurance to fund its XXX redundant reserves.
An additional key rating factor, is the strong support from Amica Mutual, which provides capital, shares brand name, management expertise and its strong consumer base, which helps Amica Mutual operate in a highly competitive environment.
