A.M. Best Revises Outlook to Positive for Mennonite Mutual Insurance Company
A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb+” of Mennonite Mutual Insurance Company (Mennonite) (Orrville, OH).
The affirmation reflects Mennonite’s moderate underwriting leverage, generally favorable operating performance and long-standing local market presence. The company’s capital position is derived from management’s conservative operating strategies, solid agency relationships and prudent catastrophe risk management. As a result, pre-tax operating gains have been reported in each of the last five years. Mennonite’s consistency is reflective of management’s commitment to managing operational risk through the use of good risk selection, sound pricing and underwriting discipline. These results are reflected in the company’s five-year average combined and operating ratios, which compare favorably to the personal property industry composite.
The positive outlook reflects A.M. Best’s expectation that Mennonite will maintain conservative risk-adjusted capitalization and sustained operating profitability.
These positive rating factors are partially offset by Mennonite’s geographic concentration of property risk in Ohio, which exposes it to weather-related events and competitive market conditions. Also, the company maintains an elevated expense ratio when compared to the personal property industry composite. However, the underwriting expense ratio is partially mitigated by the sound quality of the underlying book of business as evidenced by the company’s five-year average pure loss ratio, which significantly outperforms the industry composite. A.M. Best expects Mennonite to maintain consistent operating performance derived from its strict underwriting guidelines and conservative operating strategies specializing in serving the personal, commercial, farm and church insurance needs of its policyholders.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology — Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies” and “Understanding BCAR for Property/Casualty Insurers.” Methodologies can be found at www.ambest.com/ratings/methodology.