A.M. Best Co. has revised its outlook for Madison, Wisconsin-based American Family Insurance Group (AMFAM) to negative from stable due in part to its trend of weak operating results.
The insurer's A financial strength rating and "a" issuer credit ratings remain unchanged and were affirmed, the Oldwick, N.J.-based rating firm said.
Best also cited AMFAM's continued exposure to catastrophic losses, the recent decline in its risk-adjusted capitalization, and ongoing competitive market conditions in the personal and commercial marketplace as reasons for the outlook change.
"The group's negative operating performance over the past several years was largely due to severe wind/hail and winter storm losses as a result of AMFAM's geographic concentration in the Midwest," Best said.
The rating agency added that AMFAM's realized and unrealized capital losses resulting from "unprecedented capital market volatility" contributed to its reduction in capitalization.
Best noted that AMFAM has attempted to reduce its exposure to Midwest catastrophic losses by continuing its geographic expansion into additional states, implementing new rating zones, changing policy language and enhanced its catastrophic reinsurance program.
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