Eastern Mutual outlook changed to 'positive' by AM Best

Rating agency AM Best has revised the outlook to positive from stable and affirmed the financial strength rating of A- (Excellent) of New York-based of Eastern Mutual Insurance Company.

AM Best said the revised outlooks reflect improvement in the balance sheet strength of the company as evidenced by consistent surplus growth through both underwriting and investment activities.

"While material growth is subject to volatility due to the company’s scale, capital has consistently improved year-over-year," it said. "Furthermore, Eastern Mutual’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, is paired with consistently favorable overall loss reserve development, low underwriting leverage and modest reinsurance dependency."

According to the agency, the company’s operating performance remains strong and supported by a five-year average combined ratio that outperforms the personal property composite, driven by a materially better loss ratio and partially offset by an elevated expense ratio. The expense ratio is influenced by the relatively small scale of the company. The focused geographic and product composition is captured in the limited assessment of business profile. Appropriate ERM practices are commensurate for the complexity and size of the company.