AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” (Good) from “bbb” (Good) and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Nazareth Mutual Insurance Company (Nazareth) (Nazareth, PA). The outlook of the Long-Term ICR has been revised to stable from positive while the FSR is stable.

The Credit Ratings (ratings) reflect Nazareth’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The Long-Term ICR upgrade reflects sustained improvement in Nazareth’s key balance sheet strength metrics, supported by risk-adjusted capitalization maintained at the strongest level in recent years, as measured by Best’s Capital Adequacy Ratio (BCAR). Organic surplus growth has been generated in eight of the past 10 years, derived from profitable underwriting results that were enhanced by capital gains. Additional key balance sheet strength considerations include the company’s below average underwriting leverage, high-quality investment portfolio with solid liquidity and its comprehensive reinsurance program.

Nazareth’s operating performance benefits from favorable loss experience as reflected by its below average pure loss ratios relative to AM Best’s personal property composite. This position is partially offset by elevated expenses driven by commission costs that are strategically used to attract desirable business and above average fixed expenses related to technology costs. Despite increased volatility in underwriting results in 2023, which continued into the first half of 2024, AM Best expects the company’s operating performance to remain in line with the adequate assessment level based on management’s underwriting and pricing discipline. The limited business profile reflects the company’s property predominant risk exposure and geographic concentration in Pennsylvania. The company’s ERM is considered appropriate and commensurate with its risk profile.

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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