Oldwick, NJ -(BusinessWire)- A.M. Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a+” from “a” and affirmed the Financial Strength Rating (FSR) of A (Excellent) of Texas Mutual Insurance Company (Texas Mutual) (Austin, TX). The outlook of the Long-Term ICR has been revised to stable from positive while the outlook for the FSR remains stable.
The ratings reflect Texas Mutual’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
The upgrade reflects Texas Mutual’s continued organic growth in balance sheet strength, while maintaining conservative leverage ratios. The company continues to generate surplus while supporting sizeable policyholder dividends, which are used as part of a capital management strategy to facilitate excellent policyholder retention, as well as provide a mechanism for rate reductions without market disruption. The company’s balance sheet strength also reflects a history of favorable loss reserve development trends, good credit quality of invested assets and low use of reinsurance.
Texas Mutual’s operating performance has been consistently strong over the past five years, driven by solid pre-dividend underwriting profits, and the company’s loss experience has remained favorable for over a decade.
In addition, although Texas Mutual is limited to writing workers’ compensation in Texas, its business profile also reflects its importance in providing coverage in the state as evidenced by its dominant market share of more than 40%. Texas Mutual maintains an appropriate ERM program that reflects annual risk assessments, outlines risk appetite and tolerances, as well as mitigation strategies.
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