A.M. Best Co. released ratings updates. The following are some of the most recent:
A.M. Best Co. affirmed the FSR of A++ (
The ratings reflect the group’s strong capitalization, consistent track record of operating profitability, conservative underwriting leverage measures and favorable liquidity position. The ratings also recognize the additional financial flexibility and support provided by the group’s publicly traded parent and ultimate shareholder, Berkshire Hathaway Inc.
These positive rating factors are somewhat offset by the group’s concentrated business profile, the ongoing exposure to the California workers’ compensation market and the risks associated with a large investment allocation to equity securities.
A.M. Best Co. downgraded the FSR to B+ (Good) from B++ (Good) and ICR to “bbb-” from “bbb” of Farmers Union Mutual Insurance Co. Both ratings have been removed from under review with negative implications and assigned a negative outlook.
The ratings were placed under review on April 7, 2009, following a significant decline in Farmers Union’s surplus in 2008 and pending discussions with management regarding its capital management strategy. The rating downgrades are due in part to the continuation of underwriting losses in 2009, following a 35.5% surplus decline in 2008. Farmers
A.M. Best Co. affirmed the financial strength rating (FSR) of A++ (Superior) and issuer credit ratings (ICR) of “aaa” of Government Employees Group (GEICO) and its property/casualty members. A.M. Best also has affirmed the ICR of “aaa” as well as the debt rating of “aaa” on $150 million of 7.35% senior unsecured debentures, due 2023 of the immediate parent holding company, GEICO Corp. The outlook for all ratings is stable.
The ratings reflect GEICO’s superior financial strength, consistently strong operating performance, brand name recognition and market position as one of the top five personal automobile writers in the , A.M. Best says. These strengths are partially offset by high investment leverage, significant stockholder dividend payments in recent years to its parent company, as well as exposure to potential regulatory issues in several of its larger states.
A.M. Best Co. affirmed the FSR of A- (Excellent) and ICR of “a-” of Gulf Reinsurance Ltd. (Gulf Re) (). The outlook for both ratings is stable.
The ratings reflect the company’s excellent projected risk-adjusted capitalization, good projected financial performance and developing business profile. A partially offsetting factor is the execution risk of its revised strategic business plan.
A.M. Best Co. has upgraded the FSR to A (Excellent) from A- (Excellent) and ICR to “a” from “a-” of the IFG Cos. and its members, led by First Financial Insurance Co. and its three wholly owned subsidiaries, The Burlington Insurance Co., Alamance Insurance Co. and Guilford Insurance Co., all of which operate under an inter-company pooling arrangement. The outlook for all ratings is stable.
The rating actions reflect IFG’s strengthened capitalization, profitable underwriting results and conservative investment practices. The rating action also considers the company’s well-established agency and broker relationships, its strong underwriting expertise in the surplus lines market and its effective use of technology to source, underwrite and monitor its underwriting exposure.
A.M. Best Co. has affirmed the FSR of A (Excellent) and ICR of “a+” of MS Frontier Reinsurance Ltd., a wholly owned subsidiary of Mitsui Sumitomo Insurance Co. Ltd The outlook for both ratings is stable.
MS Frontier’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, remains strong. The ratings reflect MS Frontier’s continued excellent underwriting performance. The company’s losses from Hurricane Ike in 2008 were well managed and below market average.
A.M. Best Co. affirmed the FSR of A++ (
The ratings reflect National Indemnity’s superior risk-adjusted capitalization and market profile, historically excellent operating and total return measures, strong management team and solid liquidity. Despite a sizable reduction of policyholder surplus reported at year-end 2008 and further declines reported through first quarter 2009, the group maintains strong financial flexibility.
Separately, A.M. Best has downgraded the ICR to “aa+” from “aaa” and affirmed the FSR of A++ (
These rating actions reflect BHLN’s lack of new business development in recent years, its concentration in affiliated equity holdings and the significant exposure the company has to holdings in below investment grade bonds. At year-end 2008, an assumed block of life insurance business was recaptured, which will significantly reduce operating income going forward, barring any new business. BHLN currently administers a block of payout annuities and has limited activity in the current marketplace.
A.M. Best Co. upgraded the FSR to B+ (Good) from B (Fair) and ICR to “bbb-” from “bb” of the Republic Western Insurance Group and its members, which include Republic Western Insurance Co. and its wholly owned subsidiary, North American Fire & Casualty Insurance Co. The outlook for all ratings is stable.
The ratings reflect Republic Western’s solid risk-adjusted capitalization and improved underwriting and operating performance in recent years. The improved performance and subsequent capitalization accumulation were driven by management’s corrective actions, including cost reductions, rate refinement and the discontinuation of all non-U-Haul business. Furthermore, Republic Western’s publicly traded parent, AMERCO [NASDAQ: UHAL], does not rely on its insurance operations to meet its debt service and holding company obligations, which will further benefit growth in surplus.
A.M. Best Co. affirmed the FSR of A+ (
The ratings reflect RLI’s superior capitalization, outstanding long-term operating profitability and the financial flexibility afforded by RLI Corp. Somewhat offsetting these positive factors are the group’s above average equity leverage and the resulting susceptibility of earnings to the volatility of the financial markets.
A.M. Best Co. affirmed the FSR of A+ (
Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of “a” of The Toa Reinsurance Company of America (TRA). The outlook for both ratings is stable.
The ratings reflect Toa Re’s improved underwriting performance, more diversified sources of premium income and superior risk-adjusted capitalization.
The rating affirmation of TRA reflects its continued excellent underwriting performance in 2008 and the first quarter of 2009, partially offset by net realized capital losses. TRA’s risk-adjusted capital position remained strong despite negative changes in unrealized capital losses.
A.M. Best Co. downgraded the FSR to B (Fair) from B+ (Good) and ICR to “bb” from “bbb-” of Town and Country Mutual Insurance Co. The ratings have been removed from under review with negative implications and assigned a stable outlook.
The ratings were placed under review with negative implications on April 7, 2009, following a significant decline in Town and Country’s surplus in 2008 and pending discussions with management regarding its capital management strategy.
The downgrades are due in part to the continuation of underwriting losses in 2009, following a 40.5% surplus decline in 2008, A.M. Best says.
A.M. Best Co. revised the outlook to negative from stable and affirmed the FSR of A- (Excellent) and ICR of “a-” of United Heritage Life Insurance Co.
Concurrently, A.M. Best has upgraded the ICR to “bbb+” from “bbb” and affirmed the FSR of B++ (Good) of Sublimity Insurance Co. A.M. Best also has affirmed the FSR of B++ (Good) and ICR of “bbb” of United Heritage Property & Casualty Co. The outlook for these ratings is stable. United Heritage Life, Sublimity and UHPC are all members of the United Heritage Financial Group.
United Heritage Life’s revised outlook notes the company’s decline in its absolute capital and surplus in 2008 and through first quarter 2009 due to investment losses triggered mainly by the current credit market turmoil and volatile performance of the equity markets. These investment losses, coupled with an overall deterioration in the credit quality of its fixed-income portfolio, has placed significant downward pressure on risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR).
The upgrading of Sublimity’s ICR reflects ’its adequate capitalization, long-standing local market presence as a personal lines writer in Oregon and Idaho, and favorable underwriting performance, driven by management’s recent re-underwriting efforts, rate increases and terminations of unprofitable agents. Operating results have responded positively in recent years as a result of these initiatives coupled with generally milder weather conditions.
A.M. Best Co. revised the outlook to negative from stable and affirmed the FSR of B (Fair) and ICR of “bb” of Workmen’s Auto Insurance Co.
The revised outlook reflects the deterioration in Workmen’s risk-adjusted capitalization following significant operating losses in 2008. The ratings of Workmen’s reflect its marginal risk-adjusted capitalization and elevated underwriting leverage. Underwriting performance was impacted by significant underwriting losses as well as one time costs due to expenses from litigation and the execution of management’s product and distribution strategies. In addition, the ratings recognize the company’s concentration of exposures in the non-standard automobile line of business.
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