View this article online: https://www.claimsjournal.com/news/east/2010/06/18/110874.htm
A.M. Best said it has downgraded the issuer-credit rating of New York-based Eveready Insurance Co. to “bb”, down from “bb+”. The ratings agency also affirmed the company’s financial strength rating of B (Fair), but revised downward the outlook for both ratings to negative from stable.
The ratings firm said the move was prompted by Eveready’s accelerated premium growth, elevated underwriting leverage, geographic risk concentration and comparatively high expense structure
Eveready’s elevated reserve leverage is due to its highly litigious downstate New York automobile marketplace, Best said. As a result, operating results are subject to changes in the regulatory and legislative environment, as well as competitive market pressures. Elevated underwriting leverage measures have been attributed to competitive market conditions and the company’s business mix change, which emphasizes automobile physical damage business. In addition, Eveready’s earnings over the past several years have been tempered by persistent unprofitable underwriting results and an elevated expense structure.
These negative rating factors are partially offset by Eveready’s loss experience, which has been favorable in recent years as reflected by its five-year average pure loss ratio derived from management’s local market expertise and strong relationships with key producers. Operating performance has further benefited from the company’s profitable physical damage book, newly launched underwriting system accompanied by a new pricing structure, as well as other income generated through installment fees. Additionally, Eveready uses its “No-Fault Billing Projection Model” as an effective monitoring tool to assist in forecasting ultimate no-fault losses.
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Source: A.M. Best