The upgrade of ECM’s ratings reflects consistent above-average underwriting performance combined with increasing investment income over several years, which has increased policyholders’ surplus over the same period. The group of companies has successfully operated in the niche market of farm owners/small commercial and ancillary products for many years. ECM believes there are significant growth opportunities in this market and is slowly entering new states. These positive rating factors are partially offset by the group’s property-focused book of business that leaves it susceptible to weather-related losses. However, the group continues to maintain a comprehensive reinsurance program in an effort to mitigate the impact of weather-related losses on its profitability and capitalization.
The upgrade of Ever-Greene is indicative of its modest underwriting leverage, profitable operating performance, favorable risk-adjusted capitalization and affiliation with the group. Partially offsetting the positive factors is Ever-Greene’s limited business profile.
Positive rating action could occur if the company produces consistently above average earnings while maintaining strong risk-adjusted capitalization. The ratings may come under negative pressure if an unfavorable earnings trend develops and risk-adjusted capital deteriorates.