AM Best Outlook Stable for Missouri Valley Mutual Insurance

A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of B (Good) and the issuer credit rating of “bbb-” of Missouri Valley Mutual Insurance Co. (Missouri Valley) in Burke, S.D.

The rating outlook reflects Missouri Valley’s improved operating profitability since 2012, which has continued into 2015. As result, pre-tax and total returns on revenue and equity have improved and additions to surplus have been reported for three consecutive years with this trend also continuing into 2015.

The reversal in operating and underwriting results are in direct correlation with aggressive exposure and risk management initiatives that were implemented by management in earlier years and continue to gain traction and materialize favorably. These actions include; tighter underwriting guidelines, increased inspection programs, ensuring adequate total insured value, system enhancements and rate increases.

Partially offsetting these positive rating factors are the company’s elevated underwriting expense structure and geographic concentration of risk. Missouri Valley maintains an elevated underwriting expense structure primarily due to high other expenses.

This is not uncommon with smaller size companies that lack size and scale. However, the elevated underwriting expense structure is partially mitigated by the company’s favorable pure loss ratio, as well as its loss and loss adjusted expense ratio. In addition, as a single state writer with all of its business produced in South Dakota, the company is exposed to frequent and severe weather-related events, as well as judicial, regulatory and economic concerns.

Source: A.M. Best

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