The outlook for Harford Mutual Insurance Cos. and two of its property-casualty pool members domiciled in Bel Air, Md., have been raised from “stable” to “positive” in response to the “substantial operating improvements” made by the firms’ management team over the last few years, according to A.M. Best Co.

The ratings service also affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of The Harford Mutual Insurance Cos. and its two property-casualty pool members, the Harford Mutual Insurance Co. and Firstline National Insurance Co., both domiciled in Bel Air.

A.M. Best said the ratings reflect Harford’s excellent risk-adjusted capitalization, conservative underwriting leverage and strong liquidity. The ratings also reflect management’s greater focus and discipline in terms of underwriting, price monitoring, risk aggregation, reserving methodology, internal controls and technology to better service its agents and customers, which combined with improved loss experience, the reporting of favorable loss reserve development on recent accident years and the absence of major weather-related losses, have contributed to substantially improved underwriting and overall operating performance, the ratings service said in a statement.

Offsetting these positive factors are Harford’s higher expense ratio relative to its peers, elevated common stock leverage, which exposes Harford’s net income and surplus to the vagaries of the equity market as evidenced in recent quarters, exposure to weather-related losses due to its mid-Atlantic concentration and the near-term challenges associated with a highly competitive property/casualty environment, the service said.

The positive outlook recognizes management’s substantial operating improvements over the past several years and the future benefits to be gained from these improvements in terms of competitive advantages, operating performance and internal capital generation, the service said.