The rating agency, AM Best, has upgraded the Financial Strength Rating of the Union Mutual of Vermont Companies to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Ratings to “a” from “a-”. This includes the Union Mutual Fire Insurance Company (Union Mutual Fire) which is the lead property/casualty company and its wholly owned subsidiary, New England Guaranty Insurance Company, Inc.(New England Guaranty), as well as its mutual affiliate, Community Mutual Insurance Company (Community Mutual), which are collectively referred to as Union Mutual of Vermont Companies (Union Mutual). Union Mutual Fire and New England Guaranty are domiciled in Montpelier, VT, while Community Mutual is domiciled in Latham, NY. The outlook of these Credit Ratings (ratings) was revised to stable from positive.
Union Mutual’s response
In response to the upgrade, Union Mutual President & CEO Lisa Keysar issued the following comment:
“We are incredibly proud of our upgraded rating. The rating upgrade to A (Excellent) reflects the work of our talented employees, our solid relationships with our independent agency partners and the vision and guidance of our leadership team and board of directors.
It is our priority as a regional mutual company to be financially secure for our policyholders and our rating recognizes the Company’s strong performance and consistent results year over year. Union Mutual is committed to being a leader within the insurance industry and to be forward-thinking for our network of agencies and policyholders.”
Further comments by AM Best
In explaining its reasoning for the upgrade, AM Best noted that the ratings reflect Union Mutual’s balance sheet strength, which it assessed as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The following are futher comments from the official release:
“The rating upgrades reflect the group’s improved overall balance sheet strength. Consistently profitable operating performance has generated robust policyholders’ surplus growth over the past five years, which in turn has solidified the capital position. Union Mutual has maintained risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), while organically growing surplus through underwriting income. The investment portfolio is primarily composed of fixed income securities, and while the company does have exposure to equity risk through its common stock portfolio, the allocation is capped per investment policy guidelines and partially mitigated through predominant investment in exchange traded funds. Furthermore, management has continually refined its loss reserving practices, which have traditionally generated annual overall redundancies.
“Operating performance is expected to remain adequate, reflective of profitable results that remain subject to moderate volatility due to weather activity. Management continues to refine its profile, which is focused on New York and New England commercial multiperil and homeowners business to solidify performance. Union Mutual employs an ERM program that is considered appropriate for its scope.”
