A prominent national insurance rating firm has lowered the outlook of Kentucky Employers' Mutual Insurance from stable to negative.
In a statement this week, A.M. Best Company explained the reduction in KEMI's outlook was due to factors including "current competitive market conditions." The downgrade in outlook, though, was countered by A.M. Best continuing to rate the company's financial stability as A-, or excellent.
KEMI was created by the General Assembly in 1994 because the market for workers' compensation had collapsed, and small businesses — particularly high-risk ones such as coal companies — could not find workers' compensation insurance. It currently has more than 21,000 policyholders.
"We are extremely pleased that A.M. Best has affirmed KEMI's A- (Excellent) rating," said KEMI CEO Roger Fries in a statement. "Given the workers' compensation insurance market, we are not surprised that A.M. Best returned our outlook from stable to negative."
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A.M. Best wrote in its report explaining the downgrade of the outlook that KEMI has sustained weaker accident year underwriting performance over the past several years and has also had to face increasing black lung claims as a result of the federal overhaul of health care.