KBRA Assigns Ratings to Brotherhood Mutual Insurance Company

Kroll Bond Rating Agency (KBRA) assigns an A- insurance financial strength rating (IFSR) to Brotherhood Mutual Insurance Company (BMIC or Brotherhood Mutual). KBRA also assigns a rating of BBB to BMIC’s currently outstanding surplus notes. The Outlook for all ratings is Stable.

Brotherhood Mutual is a property/casualty company founded in 1917, incorporated in 1935, and headquartered in Fort Wayne, Indiana. BMIC is a niche underwriter, offering insurance products only to churches and related ministries.

The rating reflects BMIC’s sound capitalization, focused market strategy, and consistent surplus growth over the long term. Brotherhood Mutual’s management team is highly experienced in their market segment, with a strong track record of growth and risk management. The company has a high degree of geographic diversification, with limited exposure concentrations. KBRA believes BMIC has fundamentally sound underwriting and financial analytics with advanced technology for risk selection.

Offsetting these strengths is Brotherhood Mutual’s above average investment risk characterized by a high level of equities. The company has also seen its underwriting leverage increase in recent years. Recent adverse reserve development has also resulted in underwriting losses in two of the last three years. However, KBRA recognizes BMIC’s reserving practices have been improved, as the company’s reserve strengthening intentionally moved reserves closer to the high end of the actuary’s range.

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Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority pursuant to the Temporary Registration Regime. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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