AM Best Downgrades Credit Ratings of IMT Insurance Company and Wadena Insurance Company; Places Credit Ratings Under Review With Negative Implications

AM Best has downgraded the Financial Strength Rating to A-(Excellent) from A (Excellent) and the Long-Term Issuer Credit Ratings to “a-” (Excellent) from “a” (Excellent) of IMT Insurance Company and its affiliate, Wadena Insurance Company. These companies are domiciled in West Des Moines, IA, and are collectively referred to as IMT Insurance Companies (IMT). Concurrently, these Credit Ratings (ratings) have been placed under review with negative implications.

The ratings reflect IMT’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The rating downgrades consider significant deterioration in IMT’s key balance sheet strength metrics through June 30, 2024, as evidenced by a 30% reduction in the group’s policyholders’ surplus; this subsequently impacted its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The decline in surplus was driven by a higher frequency of severe weather-related events, particularly in April and May. The group has been taking appropriate measures since late 2022 to reduce volatility in future underwriting results. The companies’ management has continued to focus on a return to profitability by improving rate adequacy, implementing exposure management, increasing deductibles, as well as tightening underwriting and its risk appetite. The group’s operating performance remains adequate as AM Best expects appropriate rate increases likely will be earned in the near term.

Further, IMT’s ratings were placed under review with negative implications pending the successful execution of various capital management efforts. AM Best’s expectation is that these strategies will improve the group’s current capital position subject to finalizing terms and regulatory approvals. The ratings will remain under review until AM Best can properly analyze the group’s rating fundamentals following implementation. However, should the group fail to follow through on these initiatives, or fail to facilitate meaningful improvement in its current risk-adjusted capital position and underwriting results, the ratings may be downgraded further.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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