The Concord Insurance Group is based in Concord, NH since 1928
On December 11, 2015 A.M. Best announced that it had downgraded the financial strength of the Concord Group Insurance Pool. The downgrade of the Groups’ Financial Strength Rating is from A (Excellent) to A- (Excellent), while the Group’s Issuer Credit Rating, went from an “a” to an “a-“. However, the outlooks for both the Group’s Financial Strength Rating and Issuer Credit Rating have been revised by the rating agency to stable from negative.
Warning if severe weather losses continue
AM Best cautioned that further negative rating could occur if the Group continues to experience frequent and/or severe weather events in New England, which comprises the totality of the company’s business. Alternately, AM Best says further positive rating action could occur with a sustained improvement in the Group’s operating results leading to growth in its risk-adjusted capitalization.
Rating downgrade applies to all insurance companies in Concord Group
The ratings downgrade applies to all of the members of the Concord Group Insurance Pool which includes the Concord General Mutual Insurance Company of Concord, NH, the Green Mountain Insurance Company, Inc. based in Berlin, VT, the State Mutual Insurance Company of Auburn, ME, the Sunapee Mutual Fire Insurance Company of Concord, NH, and the Vermont Accident Insurance Company Inc. based in Burlington, VT., which are members of the Concord Group Insurance Pool (the Group).
Reasons for downgrade found in personal auto, weather losses in property, and the Group’s geographic footprint
In explaining the reasoning behind its decision, AM Best writes:
The rating actions reflect the Group’s trend of operating performance, which has been inconsistent and below the composite average. Underwriting losses have been driven by unfavorable experience in the personal automobile lines of business, while the property lines of business have been impacted by weather-related losses over the past five years. The pool’s geographic risk concentration has been a contributing factor to the underwriting performance, as well as the reporting of an elevated expense ratio that is higher than the composite average. In addition, the company maintains elevated common stock leverage, which exposes the balance sheet to volatile equity market conditions.
Positive Management initiatives may offset negative factors that caused downgrade
Partially offsetting these negative rating factors are the Group’s adequate risk-adjusted capitalization despite the elevated equity leverage, well-established regional market presence and several strategies implemented in the past few years that are designed to improve overall profitability. The actions undertaken include rate increases, targeting growth in profitable lines and classes of business and utilization of predictive modeling for pricing and risk selection, which will enable better valuations and exposure management. Furthermore, management is planning on growing in Massachusetts by providing commercial lines products there in an effort to gradually diversify geographically and across lines of business. The pool is also supported by a network of longstanding, strong agency relationships.