AM Best Improves Southern Mutual Church Insurance Company Credit Ratings
OLDWICK, New Jersey – (COMMERCIAL THREAD) –AM Best raised the financial strength rating to A (excellent) from A- (excellent) and the issuer’s long-term credit rating to “a” (excellent) from “a-” (excellent) from Southern Mutual Church Insurance Company (SMCIC) (Colombia, South Carolina). The outlook for these credit ratings (ratings) has been revised from positive to stable.
The ratings reflect the strength of SMCIC’s balance sheet, which AM Best considers to be very strong, as well as its strong operational performance, limited business profile and appropriate management of corporate risks.
The rating upgrades reflect improving fundamentals of SMCIC’s balance sheet strength. The company has generated strong operating performance in most years, resulting in substantial growth in surplus. The main drivers of these results include increased rates and deductibles, as well as extensive loss control initiatives. In addition, the reinsurance program has been enhanced to provide better protection against more frequent and severe catastrophic events. Strong profits have been generated steadily over the past few years despite considerable weather related losses. As a result, the risk-adjusted capitalization of SMCIC, as measured by Best’s capital adequacy ratio (BCAR), improved significantly in both baseline and stress scenarios. The maximum probable net loss modeled for one in 250 all hazards combined event remains moderately high at around 30% of the surplus. SMCIC’s business profile continues to be limited, primarily due to a concentration of real estate risk for churches of various denominations in the Southeastern United States, an area of the United States prone to severe weather events. However, diversification efforts are in place to reduce the overall exposure.
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