Standard & Poor’s revised its outlook on American Fire & Casualty Co., Ohio Casualty Insurance Co., Ohio Security Insurance Co., and West American Insurance Co., which make up the Ohio Casualty Insurance Co. Intercompany Pool (OCIP), to stable from negative.
Standard & Poor’s also said that it revised its outlook on Ohio Casualty Corp., OCIP’s parent holding company, to stable from negative.
At the same time, Standard & Poor’s affirmed its ‘BBB’ counterparty credit and financial strength ratings on OCIP and its ‘BB’ counterparty credit rating on Ohio Casualty.
“The revised outlook reflects Ohio Casualty’s improving capitalization, decreasing expense ratio, and improving operating performance,” commented Standard & Poor’s credit analyst Donovan Fraser. Standard & Poor’s expects that management will continue to make steady progress toward underwriting profitability.
Under the leadership of a new management team in 2001, OCIP initiated a new strategic plan to address unprofitable segments – particularly in personal lines – and re-underwrite the group’s book of business. Though execution risk accompanies any significant paradigm shift within a large organization, Standard & Poor’s considers the company’s approach to be a measured, conservative, long-term road map to underwriting profitability. The company has also benefited from industry-wide increased rate levels over the same time period.
However, Standard & Poor’s believes that the company has taken prudent steps to address operating inefficiencies along with the underwriting actions necessary to lay the structural foundation to achieve long-term underwriting profitability.
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