AM Best has upgraded the Financial Strength Rating to B (Fair) from B- (Fair) and the Long-Term Issuer Credit Rating to “bb” from “bb-” of Greenville Casualty Insurance Co. of Greer, S.C. The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Greenville Casualty’s balance sheet strength, which AM Best categorizes as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management, the ratings agency said in a statement.
Best said the rating upgrades reflect Greenville Casualty’s strong risk-adjusted capitalization, improved underwriting and operating performance in recent years and senior management’s operating experience and in-depth knowledge of the North Carolina and South Carolina private passenger non-standard automobile market. Additionally, Greenville Casualty has reduced its net premiums writings in recent years, which in conjunction with solid surplus growth, has reduced underwriting leverage, Best noted.
Furthermore, Greenville Casualty has implemented new underwriting tools and rate adjustments in recent years, which have improved underwriting results and operating performance substantially.
Partially offsetting these positive rating factors are Greenville Casualty’s unfavorable five-year combined ratio and operating ratio, which are worse than breakeven and compare unfavorably to its private passenger non-standard auto industry composite average, Best said. Greenville Casualty’s five-year pre-tax and total returns on revenue and equity also are negative and compare unfavorably to industry norms.
These results were driven by premium volatility early in the recent five-year period, which caused underwriting results and operating earnings to deteriorate significantly. Additionally, loss reserve development has remained adverse, driven by the private passenger auto liability line of business, although loss reserve leverage is significantly lower than industry norms. Furthermore, the company has paid significant stockholder dividends to its owner in recent years, although capitalization has remained strong.
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