A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A+’ (Superior) and issuer credit ratings (ICR) of “aa-” of Chicago-based Old Republic Insurance (formerly known as Old Republic Group) and its members and Bituminous Insurance Companies of Rock Island, Ill. and its members. Best also affirmed the FSR’s of ‘A+’ (Superior) and ICR’s of “aa-” of Great West Casualty Company of South Sioux City, Nebr. and Old Republic General Insurance Corporation (ORGENCO), as well as the FSR of ‘A-‘ (Excellent) and ICR of “a-” of Old Republic Security Assurance Company (ORSAC) of Phoenix, Ariz. However, Best has revised its outlook on all of the above ratings to negative from stable. In addition Best affirmed the FSR of ‘A’ (Excellent) and ICR of “a+” of Wisconsin’s Old Republic Surety Company (ORSC) and the FSR of ‘A’ (Excellent) and ICR of “a” of Old Republic Union Insurance Company. The outlook for the ratings on these companies is stable. All of the companies are subsidiaries of Chicago-based Old Republic International Corporation (Old Republic). Best said: “The affirmation of the ratings of Old Republic Insurance, Bituminous and Great West reflects their strong individual capitalizations, solid profitability in recent years, well-recognized franchises, expertise in their respective individual business specialties, as well as their conservative and qualified management teams. ORGENCO’s ratings reflect its strong operating performance in recent years, while recognizing its strategic role among Old Republic’s property/casualty insurers, which principally is to reinsure the business of affiliates, act as the direct writer of a material book of construction business for an affiliated Bermuda subsidiary and act to a lesser degree as a primary insurer to accommodate marketing and licensing limitations of affiliates. In addition, all these subsidiaries are afforded the financial flexibility of Old Republic, which at present has modest financial leverage.” Best then noted that the subsidiaries’ “historical asbestos and environmental reserve developments and/or the possibility of earnings variability stemming from the competitive markets in which they participate,” should be considered as offsetting factors. But, Best also indicated that the “longevity of these businesses has demonstrated their sustainability through underwriting cycles.” Best then noted: “The revised rating outlook for Old Republic Insurance, Bituminous, Great West and ORGENCO is primarily based on the uncertainties associated with the current significant cyclical downturn in the housing and related mortgage finance markets and the adverse impact this is having on Old Republic’s mortgage guaranty operations. This, in turn, could potentially affect property/casualty companies within Old Republic General Insurance Group and has already had some adverse impact on Old Republic’s title agency operations. Old Republic and its subsidiaries also maintain exposure to the housing and related mortgage finance markets by virtue of their approximate aggregate 10 percent common stock ownership of MGIC Investment Corporation and 15 percent common stock ownership of The PMI Group Inc.”
A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A-‘ (Excellent) and issuer credit ratings (ICR) of “a-” of the Delaware-based Clarendon Insurance Group and its members with stable outlooks. “Best said: “The ratings assume an orderly administration of Clarendon’s outstanding liabilities on its discontinued business, while also reflecting the projected cash flows and capital supporting these obligations.” The ratings also reflect the continued explicit support provided by Clarendon’s ultimate parent, German reinsurer Hannover Re, “as evidenced by the reinsurance cover that went into effect on July 1, 2005, coinciding with an organizational restructuring. These positive rating factors are offset by the challenges associated with reinsurance collectability and the potential for additional adverse prior year loss reserve development.”
A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A-‘ (Excellent) and assigned an issuer credit rating (ICR) of “a-” to Alabama Branch of Associated General Contractors, of American, Inc. Self-Insurers Fund (AGC). Both ratings have stable outlooks. “The ratings reflect the AGC’s conservative balance sheet, favorable operating performance and strong member persistency, which is driven by AGC’s local presence, high level of service and lucrative profit sharing in the form of policyholder dividends,” said Best. “Strong operating results have enabled members to experience lower premium rates, coverage and price stability and high dividends. These positive rating factors are offset by AGC’s limited product offering and regulatory spread of risk. This limited diversification subjects AGC to competitive pressures in the workers’ compensation market as well as economic volatility.”
A.M. Best Co. has upgraded the issuer credit ratings (ICR) to “bbb+” from “bbb” and affirmed the financial strength rating (FSR) of ‘B++’ (Good) of ECM Insurance Group and its member, Everett Cash Mutual Insurance Company. Best also revised the outlook for the FSR to positive from stable; the outlook for the ICR is positive. Best also affirmed the FSR of ‘B+’ (Good) and ICR of “bbb-” of Ever-Greene Mutual Insurance Company, as well as the FSR of ‘B++’ (Good) and ICR of “bbb” of 1ST Choice AutoInsurance Company, Inc. Both companies are separately rated members of the Group. The outlook for these ratings is stable. All companies are domiciled in Everett, Penna. Best said:: “These rating actions on the Group reflect its favorable risk-adjusted capitalization, solid underwriting and operating performance in its niche of farm owners/small commercial coverages and profitable conservative investment portfolio. These positive rating factors are somewhat offset by the Group’s tight geographic concentration of risk.” In addition, Best said the outlook reflects its expectation that “underwriting performance and risk-adjusted capitalization will continue to trend favorably in the near term. The ratings of 1ST Choice Auto recognize its favorable risk-adjusted capitalization, profitable underwriting results and strategic affiliation with the Group. Partially offsetting these positive rating factors are the company’s limited geographic concentration of risk and limited product offering.
The ratings of Ever-Greene are indicative of its modest underwriting leverage and favorable risk-adjusted capitalization, which is somewhat offset by the company’s limited business profile.”
A.M. Best Co. has upgraded the financial strength rating (FSR) to ‘B+’ (Good) from ‘B’ (Fair) and issuer credit rating (ICR) to “bbb-” from “bb+” of Bankers Insurance Group and its member, Bankers Insurance Company. Best also upgraded the FSR to ‘B+’ (Good) from ‘B’ (Fair) and the ICR to “bbb-” from “bb” of First Community Insurance Company, noting that it had been separately rated, but has now been added to the Group. Best also affirmed the FSR of ‘B’ (Fair) and ICR of “bb” of the Group’s separately rated life/health affiliate, Bankers Life Insurance Company. The outlook for all ratings is stable. All entities are located in St. Petersburg, FL. “The rating actions on the Group reflect its improved risk-adjusted capitalization, expertise in the homeowners and small commercial niches and underwriting enhancements, which have led to improved underwriting performance in recent years,” Best explained. “These positive rating factors are somewhat offset by historical variability in surplus and underwriting performance, elevated underwriting expense ratios and susceptibility to frequent and severe weather-related events due to the Group’s exposure in the Florida marketplace.”
A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A-‘ (Excellent) and assigned an issuer credit rating (ICR) of “a-” to Titan Insurance Company Inc., A Risk Retention Group, based in South Carolina. The outlook for the FSR is stable, and the outlook assigned to the ICR is stable. “The ratings reflect Titan’s solid capitalization, historically profitable operating results and its defined mission of providing claims based on contractual liability insurance coverage to Ethos Group, Inc. and its subsidiaries,” Best noted. “Partially offsetting these positive rating factors is Titan’s exposure to risk concentration since Ethos is Titan’s exclusive source of business. Titan’s risk is compounded by the fact that Ethos only sells automobile related financial products. Geographic diversification is adequate since Ethos sells products in 26 states. However, the automobile dealership business is particularly competitive, especially in the financial products category, which presents a situation where participants have a limited ability to control the rates of products offered. Nonetheless, Titan and Ethos benefit from the attention of an experienced management team.”
A.M. Best Co. has downgraded the financial strength rating (FSR) to ‘A’ (Excellent) from ‘A+’ (Superior) and issuer credit ratings (ICR) to “a” from “aa-” of Cumberland Insurance Group and its member, The Cumberland Mutual Fire Insurance Company. Best also revised its rating outlook to stable from negative. In addition Best has downgraded the FSR to ‘A-‘ (Excellent) from ‘A’ (Excellent) and ICR to “a-” from “a” of Cumberland Insurance Company, Inc. (CIC). The outlook for these ratings is negative. All companies are domiciled in Bridgeton, N.J. Best said the “rating downgrades of Cumberland Group primarily reflect its unfavorable underwriting and operating profitability over the past five years, in addition to several years of adverse loss reserve development. The group continues to maintain strong risk-adjusted capitalization, which is derived from moderate underwriting leverage, conservative investment risk, strong balance sheet liquidity and a long standing market presence as a leading property writer in New Jersey. CIC’s rating downgrades reflect a decline in its risk-adjusted capitalization following several years of unfavorable underwriting and operating performance, recently increased underwriting risk and adverse loss development trends. CIC’s adequate capitalization is derived from its modest investment leverage and local market knowledge. CIC’s weak underwriting performance was driven by competitive market conditions and its geographic and product concentration, as it predominantly writes commercial casualty business in New Jersey. The outlook reflects the potential for ongoing, unfavorable operating performance and/or declines in risk-adjusted capitalization.”
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