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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

AM Best Downgrades Credit Ratings of Vermont Mutual Insurance Company and Its Subsidiaries

AM Best has downgraded the Financial Strength Rating to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Ratings to “a+” (Excellent) from “aa-” (Superior) of Vermont Mutual Insurance Company and its fully reinsured subsidiaries, Northern Security Insurance Company, Inc., and Granite Security Insurance Company (formerly Granite Mutual Insurance Company). These companies are domiciled in Montpelier, VT and are members of Vermont Mutual Group (Vermont Mutual). The outlook of these Credit Ratings (ratings) has been revised to stable from negative.

The ratings reflect Vermont Mutual’s balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The downgrading of the ratings is based on a strategic shift in Vermont Mutual’s management of its risk-adjusted capitalization. With it resolved, AM Best has determined that the risk-adjusted capitalization has settled into the strong position as opposed to very strong as measured by Best’s Capital Adequacy Ratio (BCAR). Considering potential volatility in tail periods and restrictive reinsurance pricing, management elected to shift its target level of risk-adjusted capitalization to a level commensurate of a balance sheet strength assessment of strong. Coinciding with this shift, Vermont Mutual has been diligent in addressing insurance to value within its portfolio amid the inflationary environment, and actions resulted in a material increase in modeled probable maximum losses. Despite increased catastrophe reinsurance purchases annually, increases in capacity did not keep pace with increases in modeled losses from a return period coverage perspective.

Vermont Mutual reported a return to strong operating performance in 2024, following deterioration in its underwriting results in 2022 and 2023, due to rising inflationary trends, and increased freeze losses caused by an historic Polar Vortex that impacted the Northeast in 2023. Strong underwriting results and growing investment income in 2024, coupled with capital gains from favorable equity market conditions, resulted in record net earnings and surplus growth for the year. Consequently, Vermont Mutual’s operating performance assessment of strong continues to align with strong assessed rating units within its industry composite, on both a five- and 10-year average basis.

While Vermont Mutual has geographic and product concentrations, its effective risk selection and pricing strategies have benefited results, which along with its strong market position, supports its business profile assessment of favorable. Vermont Mutual utilizes a comprehensive and formalized ERM process, which is appropriate for its risk profile.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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