AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a” (Excellent) from “a-” (Excellent) of Midwest Insurance Company (Springfield, Illinois), West River Insurance Company (Sioux Falls, South Dakota) and Brickyard Insurance Company (Fort Wayne, Indiana), collectively known as Midwest Insurance Group (Midwest). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

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

Midwest’s balance sheet strength is supported by its strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR).

AM Best said the group’s capital position reflects consistent operating performance and a diversified, well-managed investment portfolio that provides a steady stream of net investment income, which coupled with historically strong favorable reserve development, liquidity and cash flow metrics supports the very strong balance sheet assessment.

The group’s operating performance has been upgraded to strong from adequate. This assessment is supported by sustained profitability in the group’s underwriting results combined with increasing levels of investment income. Midwest’s operating performance compares very favorably with the workers’ compensation composite on a five-year and 10-year basis contributing to strong, organic growth in surplus. Additionally, return-on-revenue and return-on-equity metrics have outpaced the composite over the past five years.

Midwest maintains modest business concentration risk, operating as a monoline workers’ compensation insurer focusing on small- to medium-sized agency partners. As a monoline workers’ compensation insurer, its limited business profile leaves it susceptible to competitive pressures in certain jurisdictions, as well as potential legislative, regulatory or judicial changes. This concern is mitigated partly by the group’s strategy to ensure responsiveness to its local agency base.

Source: AM Best

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