AM Best downgrades Michigan-based Wolverine Mutual

AM Best lowered Wolverine Mutual Insurance’s financial strength rating to C++ (marginal) from B- (fair) and long-term issuer credit rating to ‘b’ (marginal) from ‘bb-‘ (fair) , based in Dowagiac, Michigan. The outlook for these credit ratings (ratings) is negative.

The ratings reflect Wolverine’s balance sheet strength, which AM Best rates as weak, as well as marginal operating performance, limited business profile and marginal enterprise risk management.

AM Best said the downgrade reflected a significant deterioration in Wolverine’s risk-adjusted capitalization in the first half of 2024, reflected in a 27% decline in policyholder surplus. Half of the decline came from underwriting performance, although underwriting performance improved year-over-year to some extent.

AM Best also said that part of the decline in policyholder surplus was the result of adjustments made to Wolverine’s financial position as requested by its auditor. The continued decline in policyholder surplus through June 30, 2024 is on top of double-digit percentage declines in each of the last three year-end reporting periods. As a result, risk-adjusted capitalization deteriorated significantly.

While Wolverine has implemented a number of corrective actions, including rate increases, expense management initiatives and stricter underwriting guidelines, the ultimate impact of these efforts is uncertain at this time. Consequently, the negative outlook highlights the continuation of these adverse outcomes; further reductions in capitalization could result in additional negative rating actions.

Source: AM Best

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