AM Best has revised the outlooks to positive from stable an
d affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb+” (Good) of K
ansas Medical Mutual Insurance Company and its subsidiary, KAMMCO
Casualty Company, Inc. These companies are collectively referred to as Kansas Medical Mutual Group or the group.
The Credit Ratings (ratings) reflect Kansas Medical Mutual Group’s balance sheet strength, which AM Best as
sesses as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.
The revision of the outlooks to positive from stable reflects continued favorable trends in the group’s overa
ll operating performance measures following corrective actions
taken by management that have led to improved pre-tax operating earnings and overall net income in recent years. The improvement in operating earnings is d
riven by favorable trends in underwriting and op
erating metrics, which continue to improve compared with peers that are assessed as adequate from an operating performance standpoint.
Prospectively, AM Best expects the group’s favorable underwriting and operating trends to continue in the near-te
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rm, supported by favorable frequency and modest severity levels across the book of business.
KAMMCO’s return to operating profitability is largely attributable to refocused efforts in its core insurance operations, expense management initiatives and
significant rate incr
eases over the last five years. Operating performance metri
cs continue to improve and are expected to trend in line with the group’s medical professional liability (MPL) peers a
ssessed at the adequate level. The group’s investment income continued to improve through the first half of 202
5, following an increase in investment yields and less interest expense on borrowed funds.
The group’s balance sheet strength assessment remains at the very strong level, supported by its strongest level o
f risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), a conservative invest
ment portfolio and prudent reserving philosophy. Kansas Medical Mutual Group has reported favorable surplus
rowth, historically driven by realized capital gains, and in more recent periods, profitable operating earnings. Loss reserve development has been favorable in nine of the
past 10 calendar years and across most accident years.
The limited business profile reflects Kansas Medical Mutual Group’s market position as a primarily single state writer of MPL insurance. A 2019 judici
al ruling resulted in the removal of noneconomic damage caps on personal injury cases in Kansas; however, uncertainty
remains as to whether this applies to medical malpractice actions until further clarification from the Kansas Supreme Court. The group’s portfolio is subject to the Hea
lth Care Stabilization Fund (the Fund), which expanded basic coverage limits from $200,000 to $500,000 per occurren
ce, and $600,000 to $1.5 million in aggregate beginning in 2022. While the Fund tenders loss and loss adjustm
ent expenses above $500,000 to $1 million, uncertainty remains as claims experience on expanded coverage limits is minimal.