Oldwick, NJ -(BusinessWire)- AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to SFM Mutual Insurance Company and its affiliates, SFM Safe Insurance Company and SFM Select Insurance Company, collectively known as SFM Companies (SFM). The outlook assigned to these Credit Ratings (ratings) is stable. All companies are domiciled in Minneapolis, MN.
The ratings reflect SFM’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
SFM’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is categorized as strongest, and AM Best expects it to remain at a similar level in future years. The balance sheet strength assessment also considers the company’s low reinsurance dependence, improving liquidity and elevated underwriting leverage ratios.
SFM has generated an adequate level of operating performance, predominantly supported by moderate underwriting gains and a consistent stream of investment income. SFM’s limited business profile is due to the group being monoline workers’ compensation insurers with modest geographic concentration. While the group is licensed and operating in 30 states, it does business primarily in five core states: Minnesota, where it is the market-share leader, Wisconsin, Iowa, Nebraska and South Dakota. This leaves SFM susceptible to potential legislative, regulatory or judicial changes in the workers’ compensation market. Risk-management capabilities are considered appropriate for the risk profile of the group.
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