Oldwick, NJ -(BusinessWire)- -A.M. Best Co. has revised the outlook to stable from positive and affirmed the financial strength of B+ (Good) and issuer credit rating of “bbb-” of Springfield Insurance Company (Springfield) (Covina, CA).
The revised outlook reflects the increase in Springfield’s claims as well as its prior year loss development during 2012. This has produced a sizable operating loss in 2012. However, the current outlook reflects A.M. Best’s expectation that despite its negative trend in earnings during 2012, Springfield’s risk-adjusted capitalization will continue to support its current ratings.
The rating affirmations recognize Springfield’s positive trend in operating earnings in recent years, improved capitalization, conservative underwriting strategy as well as management’s expertise and knowledge of the grocery marketplace. These positive rating factors are partially offset by Springfield’s large premium dependence on California workers’ compensation where pricing and regulatory reform volatility can cause adverse results along with the recent increases in adverse loss development. As a result, Springfield is exposed to changes in the legislative and judicial environment as well as competitive pressures.
The outlook could again, be revised if Springfield’s operating performance does not return to a more profitable footing in the short term or if adverse loss reserve development continues to create a drag on the company’s earnings.