AM Best has changed its outlook for Missouri Valley Mutual Insurance Company (MVMIC) from stable to negative. This change also comes with an affirmation of its Financial Strength Rating at B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” (Good). MVMIC is based in Burke, South Dakota.
The ratings from AM Best reflect MVMIC’s financial strength, which they consider adequate. The company has shown adequate operating performance but has a limited business profile and appropriate risk management practices.
The negative outlook stems from ongoing underwriting losses that MVMIC has faced for four consecutive years, with particularly high losses in 2022 and projected for 2024. In 2022, the company reported its worst losses ever due to two major catastrophic events and several hailstorms. The losses have worsened in 2024, leading to a decline in the company’s combined ratio and operating returns.
MVMIC’s combined ratio has been above breakeven in three of the last five years and now surpasses the industry average. Although the company’s loss and loss adjustment expense ratios remain below the industry composite, there are corrective measures in place to improve future results. However, it remains uncertain whether these plans will successfully lead MVMIC back to profitability in underwriting.
AM Best assesses MVMIC’s balance sheet strength as adequate, supported by strong risk-adjusted capitalization, although this has been declining. The company enjoys favorable liquidity and low underwriting leverage, but its financial flexibility and operational scale are limited.
MVMIC’s business profile is described as limited due to its focus on a single state, South Dakota. This concentration makes it vulnerable to risks from legal, economic, and weather-related events. The company’s risk management capabilities are deemed appropriate for its moderate risk profile.
As MVMIC faces these challenges, the insurance market will be watching closely to see how the company responds and whether it can regain stable footing in the coming years.