AM Best Revises Outlooks to Negative for Brotherhood Mutual Insurance Company

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-” of Brotherhood Mutual Insurance Company (Brotherhood) (Fort Wayne, IN).

The Credit Ratings (ratings) reflect Brotherhood’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The revision in outlooks to negative from stable reflects pressure on overall balance sheet strength associated with continued volatility in loss reserves, as reflected by significant adverse development reported in 2020. While management has been actively working toward maintaining a more conservative reserve position, recent corrective initiatives will need to prove effective in stabilizing loss reserve trends over future rating cycles. Volatility in reserving trends has been experienced over the past 10-year period, with deficiencies reported in nearly all accident and calendar years.

Brotherhood’s operating performance remains adequate and benefits from increased net investment income in recent years, which has served to partially offset underwriting volatility. Despite elevated catastrophe activity in 2020 and continued adverse reserve development on prior accident years, the five-year average combined ratio is comparable to the commercial property composite. The neutral business profile reflects Brotherhood’s niche market expertise providing insurance services to churches and related ministry organizations. The company maintains a broad product line and geographic spread, operating in 47 states and the District of Columbia. AM Best views Brotherhood’s ERM practices as appropriate for its risk profile. Risk tolerance and appetite statements have been developed, as well as quantifiable economic impacts of potential risks and mitigating tactics. Catastrophe exposure, a primary risk for the company, is managed by a comprehensive reinsurance program that mitigates losses from severe weather-related events and limits volatility in operating results.

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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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