AM Best revises outlooks to negative for Grange Insurance Group
OLDWICK: 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 Ratings of “a-” of Grange Insurance Association and its fully reinsured subsidiary, Granwest Property & Casualty, collectively referred to as Grange Insurance Group. Both companies are domiciled in Seattle, WA.
The ratings reflect Grange’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The revised outlooks to negative reflect ongoing adverse loss reserve development that, combined with increased weather losses, have contributed to operating losses and limited surplus growth in recent years. While initiatives have been put in place to curb adverse development and better align pricing with risks, results have not benefited yet from these actions.
Grange’s balance sheet strength reflects the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and its comprehensive reinsurance program, partially offset by ongoing adverse loss reserve development and a lack of organic surplus growth.
Grange’s operating performance continues to experience volatility, largely due to weather events and wildfire losses, which have resulted in underwriting and operating performance metrics that trail the private passenger and homeowners composite. Grange maintains a long-standing market position in the Pacific Northwest personal lines market and is one of the largest writers of farmowners business in its territory.
AM Best views Grange’s ERM to be appropriate, with stress testing and capital modeling performed for the top risks of the organization.