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AM Best Revises Outlooks to Negative for Loudoun 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 Loudoun Mutual Insurance Company (Loudoun) (Waterford, VA).

The ratings reflect Loudoun’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

The revised outlooks to negative reflect Loudoun’s underwriting losses in recent years driven by significant and frequent weather-related events that have resulted in a downturn in underwriting and operating performance metrics. While management has undertaken several corrective initiatives to improve the company’s long-term performance that included weather analytics for claims and underwriting, as well as targeted rate strengthening in select territories, the current strong assessment will continue to face pressure over the near term.

Loudoun’s balance sheet strength is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and a high quality investment portfolio that is dominated by fixed-income securities, somewhat offset by above-average common stock leverage and volatility in reserves with adverse development experienced in recent years. The limited business profile reflects the company’s property predominate book of business and geographic concentration in Virginia that exposes operations to the impact of weather-related events as observed in recent years. AM Best views Loudoun’s ERM as appropriate with risk identification and controls in place and stress testing performed on the organization’s largest risks.

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 provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Maurice Thomas
Senior Financial Analyst
+1 908 439 2200, ext. 5794

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Michelle Baurkot
+1 908 439 2200, ext. 5423

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644