AM Best Revises Outlooks to Negative for Members of Mid-Hudson Group

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 Ratings of “a-” (Excellent) of Claverack Cooperative Insurance Company, Midrox Insurance Company and Mid-Hudson Co-Operative Insurance Company. These companies are collectively referred to as Mid-Hudson Group or the group and domiciled in Montgomery, NY.

The Credit Ratings (ratings) reflect the group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The revision of the outlooks to negative from stable reflects the deterioration in the group’s operating performance. Over the past four years and continuing into 2022, the group has reported unfavorable underwriting results for various reasons including increased fire losses and weather-related events, as well as increasing reinsurance costs. In 2020 and 2021, the group reported numerous fire losses and a weather-related event that significantly increased incurred loss totals and resulted in the group reporting elevated combined ratios. Management has taken aggressive actions to reverse this trend, which include targeted rate increases, terminated unprofitable agents, increased reserves, and reduced policies while maintaining premium levels. To date, the underlying book of business has seen some improvement, but 2022 results continue to be unfavorable, particularly relative to the adequate assessment. Despite deterioration in operating results, the group has been able to maintain its strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and very strong balance sheet assessment through additions to policyholder surplus in four of the past five years as a result of realized and unrealized gains given the high allocation to equities. However, recent equity market volatility has driven deterioration in surplus.

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.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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