AM Best downgrades Iowa IMT insurance credit rating

AM Best lowered the financial strength rating to A-(Excellent) from A (Excellent) and the long-term issuer credit rating to ‘a-‘ (Excellent) from ‘a’ (Excellent) of IMT Insurance Company and of its subsidiary, the Wadena Insurance Company. These companies are domiciled in West Des Moines, Iowa. and are collectively referred to as IMT Insurance Companies (IMT). At the same time, these credit ratings (ratings) were subject to revision with negative implications.

The ratings reflect the strength of IMT’s balance sheet, which AM Best rates as very strong, as well as adequate operational performance, a neutral business profile and adequate enterprise risk management.

IMT offers personal and commercial insurance products in Illinois, Iowa, Minnesota, Nebraska, South Dakota and Wisconsin.

The downgrade takes into account the significant deterioration of IMT’s key balance sheet value by June 30, 2024, as demonstrated by a 30% reduction in the group’s policyholder surplus; this subsequently affected risk-adjusted capitalization as measured by Best’s capital adequacy ratio (BCAR). The decrease in the surplus was driven by a higher frequency of severe weather events, particularly in April and May.

AM Best said the group had taken appropriate measures from the end of 2022 to reduce the volatility of future underwriting results. Corporate management continued to focus on returning to profitability by improving rate adequacy, implementing exposure management, increasing deductibles, as well as tightening underwriting and risk appetite. The group’s operating performance remains adequate as AM Best expects the corresponding rate increases likely to be earned in the near term.

In addition, IMT’s ratings have been subject to review with negative implications pending the successful execution of various capital management efforts. AM Best expects these strategies to improve the group’s current capital position, subject to finalization of terms and regulatory approvals.

The ratings will remain under review until AM Best can properly analyze the group’s rating fundamentals after implementation. However, should the group fail to pursue these initiatives or facilitate significant improvement in its current risk-adjusted capital position and underwriting results, the ratings may be further downgraded.

TOPICS
AM Best Iowa