OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to C++ (Marginal) from B- (Fair) and the Long-Term Issuer Credit Rating to “b” (Marginal) from “bb-” (Fair) of Wolverine Mutual Insurance Company (Wolverine) (Dowagiac, MI). The outlook of these Credit Ratings (ratings) is negative.
The ratings reflect Wolverine’s balance sheet strength, which AM Best assesses as weak, as well as its marginal operating performance, limited business profile and marginal enterprise risk management.
The rating downgrades reflect considerable deterioration in Wolverine’s risk-adjusted capitalization through the first half of 2024 as reflected in a 27% decline in policyholder surplus. Half of the decline stemmed from underwriting performance, although underwriting performance has seen improvements year over year to a degree. Also, some of the decline in policyholder surplus was a result of adjustments made to Wolverine’s financial statement as requested by its auditor. The continued decline in policyholder surplus through June 30, 2024, is in addition to double-digit percentage decreases in each of the past three year-end reporting periods. As a result, risk-adjusted capitalization has deteriorated significantly.
While Wolverine has implemented a number of corrective actions including rate increases, expense management initiatives and tightened underwriting guidelines, the ultimate impact of these efforts is uncertain at this time. Accordingly, the negative outlooks highlight continuation of these adverse results; further reductions in capitalization could lead to additional negative rating action.
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