OLDWICK, N.J.–(BUSINESS WIRE)–#insurance—AM Best has downgraded the Financial Strength Rating (FSR) to C++ (Marginal) from B- (Fair) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “b+” (Marginal) from “bb-” (Fair) of Oregon Mutual Insurance Company and Western Protectors Insurance Company, which are domiciled in McMinnville, OR and collectively referred to as Oregon Mutual Group. The outlook of the FSR has been revised to stable from negative, while the outlook of the Long-Term ICRs is negative. Concurrently, AM Best has withdrawn these Credit Ratings (ratings) as Oregon Mutual Group has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect Oregon Mutual Group’s balance sheet strength, which AM Best assesses as weak, as well as its marginal operating performance, limited business profile and marginal enterprise risk management.
The rating actions reflect weakening in Oregon Mutual Group’s balance sheet, due to continued surplus erosion in three consecutive years and continuing through the second quarter of 2025. The surplus decline in the second of quarter of 2025 was a result of continued adverse loss reserve development attributed to 2023 California commercial auto business interruption claims, impacted by economic and social inflation. During this period, the group’s surplus position declined by $13.8 million (27.1%), which also led the overall risk-adjusted capitalization to decline to weak levels.
AM Best assesses Oregon Mutual Group’s operating performance as marginal due to volatile underwriting results in recent years, which have been driven by economic and social inflations. While the group has undertaken initiatives to improve profitability, recent results have trailed its peer composite. Oregon Mutual Group’s underwriting and operating ratios, as well as its return-on-revenue and return-on-equity measures, compare unfavorably with composite averages. AM Best assesses the group’s business profile as limited, reflecting its focus on commercial lines, with over half its book of business in California on a direct written premium basis. Historically, California has had a challenging regulatory environment that has impacted the group’s results in recent years.
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.
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