A.M. Best Co. Inc. on Friday downgraded Alabama Municipal Insurance Corp.’s financial strength rating to B++ from A-, citing poor results related to property losses, inflation and concerns over its law enforcement liability business.
“The downgrade of the ratings reflects material deterioration in AMIC’s underwriting results over consecutive periods that significantly deviate from historic norms,” the Oldwick, New Jersey-based rating agency said in a statement.
AMIC reported a loss ratio of 91% and a combined ratio of 113% in 2022.
The Montgomery, Alabama-based insurer’s law enforcement liability business has been hit by litigation going to federal courts, which avoids state tort liability caps and increases defense costs, Best said.
“AMIC management responded with pronounced rate initiatives, educational awareness in the judicial system, officer training and more refined reviews of insureds; however, initiatives have yet to gain traction,” Best said.
According to information on AMIC’s website, the insurer had 589 policyholders in 2022, comprising 392 municipalities, 81 utility boards, 41 solid waste or water authorities, 54 associations and 21 transit authorities, claiming a market share of more than 95% in the state.
AMIC wrote $55 million in direct written premium last year.
AMIC did not immediately respond to a request for comment.