OLDWICK: AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of Slavonic Mutual Fire Insurance Association and its wholly owned subsidiary, Slavonic Insurance Company of Texas.
Both companies are domiciled in Rosenberg, TX. These companies are collectively known as Slavonic Mutual Group (Slavonic).
These ratings reflect Slavonic’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The revised outlooks to negative reflect Slavonic’s diminishing business profile, which is very constrained as it writes a limited product base within a declining niche market. In addition, it operates within a tight geographic spread in Texas, which exposes it to frequent and severe localized weather events.
The company’s niche market of fraternal organizations has declined significantly over the last 10 years due to an aging population and shows no signs of reversal or growth in the near future. Further, Slavonic’s limited product base consists of homeowners insurance that primarily covers fire loses and is limited under the Texas Insurance Code.
With greater demand for bundled, comprehensive products, Slavonic’s product offering cannot compete against carriers offering these broader types of products to the public. Therefore, entry into the general population and growth with the declining market of fraternal organizations will remain a challenge for Slavonic.
These factors will continue to weigh down on AM Best’s assessment of Slavonic’s business profile over the near-term.