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AM Best Upgrades Credit Ratings of Texas Mutual Insurance Company

BY Business Wire | CORPORATE | 05:11 PM EST

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has upgraded the Financial Strength Rating to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit Rating to ?aa-? (Superior) from ?a+? (Excellent) of Texas Mutual Insurance Company (Texas Mutual) (Austin, TX). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

The ratings reflect Texas Mutual?s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

The rating upgrades reflect Texas Mutual?s strong market presence in the Texas workers? compensation segment, which has resulted in a history of favorable operating performance and organic surplus growth. Texas Mutual holds a workers? compensation market share of 41.4% in Texas and is ranked the 16th largest workers? compensation writer by direct premiums written in the United States as of 2023. The company?s strong presence in this segment underscores its competitive position and diversified profile across all industries in the Texas economy. As the market of last resort in Texas, the company further benefits from the flexibility of a multitier underwriting and pricing flexibility approach along with the exemption from federal income taxes. While Texas Mutual?s business is limited to the workers? compensation product, the market position enabled the company to achieve strong profitability on a five- and 10-year basis.

Texas Mutual maintains the strongest level of risk-adjusted capitalization, as measured by Best Capital Adequacy Ratio (BCAR). Consistent organic surplus expansion outpaced the growth of premium leading to favorable underwriting leverage metrics. Balance sheet strength is further enhanced by conservative reserving practices and low reinsurance dependence. The investment portfolio primarily consists of high-quality fixed income with a growing share of alternative assets. However, the level of capitalization is more than sufficient to support current risks.

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.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright ? 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Source: AM Best

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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