Market Overview

A.M. Best Revises Outlooks to Negative for Wisconsin Municipal Mutual Insurance Company


A.M. 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-" for Wisconsin Municipal Mutual
Insurance Company
(WMMIC) (Madison, WI).

The ratings reflect WMMIC's balance sheet strength, which A.M. Best
categorizes as very strong, as well as its adequate operating
performance, limited business profile and appropriate enterprise risk
management (ERM).

These positive rating factors are derived from the company's modest
underwriting leverage, adequate operating performance, long-standing
relationships with its municipal and county member/insureds and emphasis
on loss control efforts as part of its overall ERM. Other positive
factors supporting the ratings include WMMIC's conservative investment
portfolio comprised of highly rated bonds and overall operating strategy.

The negative outlooks reflect reported operating losses and adverse
trend in underwriting results over the past three years resulting in
declines in policyholder surplus. The operating losses were due to
unfavorable underwriting results driven by adverse loss reserve
development on several large liability claims. Nonetheless, a prudent
reinsurance program and an emphasis on loss control have mitigated the
frequency and severity of these exposures. While WMMIC has successfully
attracted and retained its member/insureds through profit sharing via
policyholder dividends, it has led to negative return measures and
significantly elevated combined and operating ratios. In the latest
five-year period, policyholder dividends have averaged approximately 53
points to the company's combined ratio. Further, WMMIC has a limited
business profile due to its limited pool of potential policyholders,
product offerings and geography.

This press release relates to Credit Ratings that have been published
on A.M. 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 A.M. Best's
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
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