AM Best has revised the outlook to negative from stable of Vermont Mutual Insurance Company, its reinsured subsidiary, Northern Security Insurance Company, and its reinsured affiliate, Granite Security Insurance Company.
The agency affirms the financial strength rating of A+ and the long-term issuer credit ratings of “aa-” of these companies, members of Vermont Mutual Group.
The negative outlooks are based on the declining trend in Vermont Mutual’s risk-adjusted capitalisation in recent years, which has created pressure on its overall balance sheet assessment.
This was partially driven by increased modelled losses from inflationary trends and management’s increased insurance-to-value efforts.
Additionally, the organisation’s capital growth in recent years has been subdued by volatility in its operating performance, influenced by material property exposure within the group’s footprint.
However, near-term capital management plans are expected to materially improve the company’s capital position.
AM Best assesses Vermont Mutual’s balance sheet strength to be very strong, as well as demonstrating strong operating performance, favourable business profile and appropriate enterprise risk management.
Vermont Mutual maintains a strong level of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio.
