A.M. Best Downgrades Ratings of Standard Mutual Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has downgraded the financial strength rating to B+ (Good) from B++ (Good) and the issuer credit rating to “bbb-” from “bbb” of Standard Mutual Insurance Company (SMIC) (Springfield, IL). The outlook for both ratings is negative.

The downgrade reflects SMIC’s declining trend in risk-adjusted capitalization as a result of continuing pre-tax operating losses over the latest five-year period. The company’s negative operating performance was driven by underwriting losses, mostly due to weather-related events. Additional negative rating factors include the company’s elevated expense structure and geographic concentration in Illinois (71% of total direct premiums written) and Indiana (29%). SMIC provides limited product offerings and is subject to judicial, legislative and regulatory actions.

The negative outlook further reflects the potential for continued operating losses and the uncertainty that management’s initiatives will return the company to operating profitability over the intermediate term. Management attributes the favorable results in the third and fourth quarters of 2014 and the first quarter of 2015 to prior-year rate increases, underwriting actions that are starting to gain traction and more favorable weather conditions.

There is potential for further negative rating action if SMIC fails to improve its operating performance, along with its policyholders’ surplus and risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio. Stabilization of the rating and/or the outlook is contingent upon consistent and improved operating performance.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

• Catastrophe Analysis in A.M. Best Ratings
• Evaluating U.S. Surplus Notes
• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for Property/Casualty Insurers

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best
Maurice Thomas, 908-439-2200, ext. 5794
Senior Financial Analyst
[email protected]
or
Rick Decker, 908-439-2200, ext. 5423
Assistant Vice President
[email protected]
or
Christopher Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Which Music Video Maker Is Best in 2026? Why a Song-First Workflow Changes the Answer
• Best Sharps Mail-Back Solutions for Small Medical Practices (2026): Sharps Assure Recognized by Expert Consumers
• Net Asset Value