OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Arrow Mutual Liability Insurance Company (Arrow Mutual) (Chestnut Hill, MA).
The revised outlook reflects Arrow Mutual’s poor underwriting results in 2009 and 2010, and net losses recorded in each of the past three years. As a result, the company’s underwriting performance on a pre-retro and pre-dividend basis trails other similar rated companies within the workers’ compensation composite. In addition, Arrow Mutual maintains elevated common stock leverage and a business concentration risk, operating as a monoline workers’ compensation insurer with limited geographic spread that exposes operations to changes in the economic, competitive and regulatory environments.
Despite the change in outlook, the affirmation reflects Arrow Mutual’s strong capitalization and low underwriting leverage measures. The rating acknowledges the company’s not-for-profit business strategy of providing workers’ compensation insurance to a limited number of employers, primarily within Massachusetts. Arrow Mutual exists solely for the benefit for its policyholders and its unique business model provides low-cost coverage through retrospectively returned premium and the return of policyholder dividends.