Monday’s Post 10/24/11 –  As a worldwide insurance-rating and information agency surfacing for more than hundred years of existence, A.M. Best Company is a full-service credit rating organization steadfast in giving reliable statistics in insurance industry. People who have bought insurance policies refer to company’s ratings and strategic analysis in assessing strength and creditworthiness of risk-bearing entities.

Just recently, A.M. Best Co. publicized the demotion of the rating of ILM Group and its constituents to B+ (Good) to B++ (Good) and also its issuer credit rating to “BBB-” from “BBB”. This includes Indiana Lumbermens Mutual Insurance Co., Lone Star National Insurance Co. and National Building Material Assurance Co.. All of the enumerated firms are cited in Indianapolis. All of the ratings, as observed, have been changes to stable from negative.  Indiana Lumbermens Mutual Insurance is regarded as one of the premiere mutual insurance company which provides intelligent insurance solutions to the building materials and forest product industries. It has also leveraged its extensive experience in the business to help its clients position themselves for profitability and growth. With this, the company is regarded as one of the leading specialty property and casualty insurance providers.  A.M. Best noted that such downgrading is just a mere reflection of ILM’s unbalanced underwriting in a span of five-year period. Such dilemma is primarily contributed large property losses, accumulation of weather related losses, relatively high underwriting expenses and areas of adverse loss reserve development in years of tragedy and misfortune.     Though ILM’s risk-adjusted capitalization boosts the rating of the company, factors like competitive market conditions, weak underwriting results and challenging macroeconomic conditions have dragged the overall score of the corporation which has great impact on their operating performance for some years.  Even if plausible strategic initiatives to improve the group’s underwriting performance were already laid on the table, execution of the company’s business plan should first be strengthened into profitable results. A.M. best is worried by ILM’s underwriting performance as well as further erosion of capital for 2012 since the company will continue to surface in the market with greater competitive market conditions.

-Mike 

Michael E. Dortch
President &  Managing Agent
InsureDirect.com
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602