The Sun Herald reports that A.M. Best, an insurance industry credit rating organization, whose rating methodology is used to assess the financial strength and creditworthiness of insurance companies, recently revised its outlook to “negative” for Kentucky Employers’ Mutual Insurance (KEMI), a Kentucky workers’ compensation insurer.
While Best affirmed KEMI’s financial strength rating of A- (Excellent) and issuer credit rating of “a-”, offsetting these positive rating factors was, the company noted:
[T]he deterioration in KEMI’s underwriting results over the past three years, as well as areas of adverse prior year loss reserve development, particularly in 2010 and 2011 related to the Byrd Amendment. Additionally, KEMI maintains limited spread of risk as a mono-line, mono-state workers’ compensation writer, which inherently exposes the company to potential changes within the economic, competitive and regulatory environment.
KEMI has long boasted its standing in the workers’ compensation insurance industry and in a statement posted on its Web site attempted to put a postitive spin on the downgrade.
Kentucky Employers’ Mutual Insurance (KEMI) was created by the General Assembly as part of the workers’ compensation overhaul in 1994 and provides workers’ compensation insurance to more than 20,000 policyholders across the state. In 2010 Kentucky Gov. Steve Beshear asked KEMI to consider returning some of its then $147 million surplus as a premium reduction or dividend to the small businesses it insures.