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A.M. Best Downgrades Credit Ratings of Members of Amica Mutual Group; Affirms Credit Ratings of Amica Life Insurance Company











OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best has downgraded the Financial Strength Rating (FSR) toA+ (Superior) from A++ (Superior) and the Long-Term Issuer CreditRatings (Long Term ICR) to “aa” from “aa+” of Amica Mutual InsuranceCompany (Amica Mutual) and its wholly owned subsidiary, AmicaProperty & Casualty Insurance Company (together known as AmicaMutual Group) (Amica). The outlook of the Long-Term ICR has beenrevised to negative from stable, while the outlook of the FSR remainsstable. Concurrently, A.M. Best has affirmed the FSR of A+ (Superior)and the Long-Term ICR of “aa-” of Amica Life Insurance Company (AmicaLife), a wholly owned subsidiary of Amica Mutual. The outlook of theseCredit Ratings (ratings) is stable. All companies are domiciled inLincoln, RI.

While Amica maintains strong risk-adjusted capitalization, the ratingdowngrades are related to deteriorating underwriting results in recentyears, mainly driven by increased catastrophe losses in conjunction withelevated losses on the automobile insurance line of business, dueprimarily to increases in claims severity. The group is a direct writerof personal lines property/casualty products. Amica’s net underwritinglosses reflect the increasing loss ratio in recent years, which comparesunfavorably with similarly A.M. Best-rated peer companies and companiesin the private passenger standard auto and homeowners composite.Management has responded with rate increases, and coupled with a returnto a more normalized level of loss activity, expects underwritingresults to improve in the near future. Additionally, surplus growth hasbeen tempered over the latest five-year period, primarily due to thepayment of significant levels of policyholder dividends.

Amica’s results rely heavily on net investment income and realizedcapital gains, which have collectively contributed to positive operatingcash flows in most years. In 2015, the group reported negative operatingcash flow due to their higher-than-normal catastrophe experience;however, they were able to generate positive cash flows from operationsin 2016. The ratings also reflect Amica’s strong, yet declining, levelof risk-adjusted capitalization, reflective of a high quality investmentportfolio and relatively low underwriting leverage, solid liquidity,generally favorable operating returns and national market presence andbrand recognition, with a reputation for excellent customer service.

Amica Life’s ratings reflect the company’s strategic role within AmicaMutual, strong capitalization levels driven by profitable operations,absence of shareholder dividends and its ongoing initiatives to growlife insurance premium and strengthen its market penetration withinAmica Mutual’s policyholder base. In addition to growing the businessthrough the existing captive relationship, the company continuesexpansion efforts to external customers. Offsetting rating factorsinclude challenges associated with asset-liability matching,reinvestment risk given the continued low interest rate environment,modest penetration of its parent’s large customer base and reducedearnings due to increased expenses associated with the company’s plan toexpand outside of the captive property/casualty client base.

This press release relates to Credit Ratings that have been publishedon A.M. Best’s website. For all rating information relating to therelease and pertinent disclosures, including details of the officeresponsible for issuing each of the individual ratings referenced inthis release, please see A.M. Best’s RecentRating Activity web page. For additional informationregarding the use and limitations of Credit Rating opinions, please view UnderstandingBest’s Credit Ratings.

A.M. Best is the world’s oldest and most authoritative insurancerating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or itssubsidiaries. ALL RIGHTS RESERVED.
















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