Best downgrades Wisconsin insurer

AM Best Inc. Tuesday downgraded the financial strength rating of Cities and Villages Mutual Insurance Co. to A- from A.

The rating downgrade reflects the insurer’s geographic concentration as a single-state writer in Wisconsin with product concentration, which has led to a deterioration in results, Best said.

Wauwatosa, Wisconsin-based Cities and Villages’ had net premiums earned in 2024 of $16.6 million, off 4.4% from 2023, while its net loss increased 31% to  $3.7 million.

The company’s volatile operating performance over the past five years, driven by underwriting losses in recent years, has suppressed policyholders’ surplus growth over the long term, Best said

A substantial increase in pure losses, driven primarily by auto physical damage claims, has fueled volatility in the company’s results, which continued through year-end 2024.

“A prolonged continuation of adverse underwriting results may result in further negative rating actions,” Best cautioned.

The insurer still benefits from high member retention, exceptional safety training programs for its members, a strong reputation in its operating territory and an experienced management team, Best said in its note.