AM Best has affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bb+” of State Mutual Insurance Company (State Mutual) (Rome, GA). The outlook of these Credit ratings (ratings) is stable. Concurrently, AM Best has withdrawn the ratings in response to the company’s request to no longer participate in AM Best interactive rating process.

The ratings reflect State Mutual’s balance sheet strength, which AM Best categorizes as adequate, as well as its marginal operating performance, neutral business profile and marginal enterprise risk management.

The balance sheet strength assessment reflected the long-term declining trend in capital and surplus as a result of capital losses from investments, operating losses due to high expenses and reduced net premiums resulting from reinsurance transactions. While capitalization has been supported in part by reinsurance, AM Best does not view such one-time surplus relief transactions as a viable long-term strategy to support capital. In addition, State Mutual holds higher risk assets in its investment portfolio that reduce liquidity and could result in further capital losses.