A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of B (Fair) and issuer credit rating (ICR) of “bb+” of MGA Insurance Company Inc. (MGA) of Dallas, Texas. Concurrently, Best revised the outlook to positive from stable and affirmed the ICR of “b” of MGA’s publicly traded holding company, Gainsco Inc., also headquartered in Dallas.
These rating actions recognize MGA’s enhanced risk-adjusted capitalization and generally profitable operating results during a period of challenging economic conditions. Historically, elevated underwriting leverage was the result of MGA’s strategic business development in the personal nonstandard automobile business; however, premium growth has been tempered in recent years.
These rating factors are somewhat offset by MGA’s historically unfavorable loss reserve development, although improvement has been seen in recent periods, and its variable underwriting performance.
Source: A.M. Best, www.ambest.com/ratings.
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