AM Best has placed under review with negative implications the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of Pharmacists Mutual Insurance Company (PMIC) and its wholly owned reinsured subsidiary, Chiron Insurance Company (Chiron). At the same time, AM Best has placed under review with negative implications the Long-Term Issue Credit Rating of “bbb” (Good) of the $25 million, 7.375% surplus notes, due 2039, issued by PMIC. These companies are domiciled in Algona, IA and collectively referred to as PMIG or the group.

These Credit Ratings (ratings) have been placed under review following a substantial decline in the group’s policyholder surplus and overall risk-adjusted capitalization through Dec. 31, 2023, driven primarily by continued underwriting losses and unexpected adverse loss reserve development on prior year claims. Although PMIG is in the process of exiting the personal lines sector, the unfavorable reserve development was primarily caused by both the personal and commercial auto lines, as well as commercial multi-peril and workers compensation lines of business. As a result, the group’s key balance sheet strength metrics are no longer supportive of the current assessment.

At present, management is actively pursuing various capital management strategies aimed at bolstering policyholder surplus, reducing net volatility and mitigating additional reserving deficiencies. AM Best’s expectation is that these strategies will improve in the group’s current position and be applied within the next few months, 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, the ratings may be downgraded.

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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