AM Best Revises Outlooks to Negative for Western Reserve Group’s Members

AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of the following pooled members of Western Reserve Group: Western Reserve Mutual Casualty Company, Lightning Rod Mutual Insurance Company, and Sonnenberg Mutual Insurance Company. These companies are domiciled in Wooster, OH and collectively referred to as Western Reserve Group (WRG or the group).

These Credit Ratings (ratings) reflect WRG’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The negative outlooks reflect volatility in the group’s operating performance in recent years related to significant weather-related events. The deterioration in WRG’s operating performance over the past two years has generated a surplus decline of nearly 22%. The group’s weakened operating performance was primarily driven by deteriorating underwriting results due to an increase in frequency of weather-related events along with the impact of increasing loss costs due to increasing inflation and supply chain issues. The group’s 2023 underwriting results were impacted by 18 weather-related events.

AM Best notes that WRG has undertaken several initiatives to improve and stabilize its overall financial performance. While these actions may result in stabilization of recent trends, failure to execute on these strategic plans could result in a downward revision of the group’s adequate operating performance assessment.

Nevertheless, WRG’s very strong level of balance sheet strength remains supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), stable loss reserving trends, its diversified investment portfolio and an appropriate reinsurance program. The neutral business profile assessment reflects the group’s diverse personal and commercial products. The appropriate ERM reflects the group’s overall framework and capabilities with board of director oversight and monitoring of identified risks and tolerances.

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.

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