Major Rating Factors:
A history of deficient reserves (1.7 on a scale of 0 to 10) that places pressure on both capital and profits. In the last five years, reserves (two year development) fluctuated between 39% and 27% deficeint. Weak profitability index (1.8) with operating losses during 2019, 2021 and 2022. Average return on equity over the last five years has been poor at -6.2%.
Other Rating Factors:
Weak overall results on stability tests (2.7) including weak results on operational trends and negative cash flow from operations for 2022. The largest net exposure for one risk is conservative at 1.9% of capital. Fair long-term capitalization index (3.2) based on fair current risk adjusted capital (severe loss scenario). Fair liquidity (3.8) as cash resources may not be adequate to cover a spike in claims.
Stability Factors:
D - Limited diversification of general business, policy, and/or investment risk.
F - Negative cash flow.
L - Past results on our liquidity tests.
T - Significant trends in critical asset, liability, income or expense items.
Principal Lines of Business:
Farmowners (36.6%), personal/comm auto (32.0%), comm multi (26.8%), homeowners (0.8%), work comp (0.5%), fire (0.5%), other (3.0%)
Licensed in:
All states except CO, CT, ME, NH, NY, SD, TN, VT, PR
Principal Investments:
Investment grade bonds (48.3%), common stock (0.2%), other (51.5%)