AM Best Downgrades Credit Ratings of Oregon Mutual Group Members

AM Best has downgraded the Financial Strength Rating to B- (Fair) from B++ (Good) and the Long-Term Issuer Credit Ratings to “bb-” (Fair) from “bbb” (Good) of Oregon Mutual Insurance Company and Western Protectors Insurance Company, which are domiciled in McMinnville, OR and collectively referred to as Oregon Mutual Group. The outlooks of these Credit Ratings (ratings) have been revised to negative from stable.

The ratings reflect Oregon Mutual Group’s balance sheet strength, which AM Best assesses as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).

According to a press release, the rating actions reflect the continued deterioration in Oregon Mutual Group’s balance sheet metrics, which has been primarily driven by continued surplus erosion in three consecutive years that continued into first-quarter 2025. The surplus decline in 2025, was a result of continued adverse loss reserve development from several large claims, impacted by economic and social inflation, in addition to smoke related claims attributed to the California wildfires.

Related: AM Best Downgrades Nonprofits Insurance Alliance Members in California, Vermont

AM Best reported that through first-quarter 2025, the group’s surplus position declined by $6.5 million (12.8%) which led the overall risk-adjusted capitalization to decline to adequate levels.

“Despite Oregon Mutual Group’s undertaking initiatives to improve profitability, efforts have not gained meaningful traction and have not effectively insulated the group’s condition, which led to its ERM assessment being lowered to marginal,” the press release said. “Oregon Mutual Group’s operating performance is assessed as marginal due to volatile underwriting results in recent years, which have been driven by economic and social inflations.”

AM Best noted that while the group has undertaken initiatives to improve profitability, recent results have trailed its peer composite, and that Oregon Mutual Group’s underwriting and operating ratios, as well as its return-on-revenue and return-on-equity measures, compare unfavorably to the composite averages. The group’s business profile is assessed as limited, reflecting its focus on commercial lines, with over half its book in California on a direct written premium basis. California has historically had a challenging regulatory environment that has impacted the group’s results in recent years.

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