A.M. Best Assigns Credit Ratings to Delaware’s Auto-Owners Specialty Insurance

June 11, 2018

A.M. Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of a- to Auto-Owners Specialty Insurance Company (AOSIC) of Dover, Del. The outlook assigned to these ratings is stable.

These ratings reflect AOSIC’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, very limited business profile and appropriate enterprise risk management.

AOSIC is a shell company that plans to provide excess and surplus lines coverage to small and medium-size commercial businesses in North Carolina. Risk-adjusted capitalization is supportive of its business plan, which includes moderate premium growth projections. In addition, the company is led by a management team with a track record of generating favorable operating results at its sister company, Atlantic Casualty Insurance Company, and possessing knowledge of the surplus lines commercial property and casualty business. These positive rating factors are offset partially by the expected concentration of non-admitted business in one state.

The ratings further reflect the benefits AOSIC receives from being owned by Auto-Owners Insurance Company, domiciled in Lansing, Mich., which is a larger, strongly capitalized insurance organization. Auto-Owners completed the acquisition of AOSIC, formerly Little River Insurance Company, and Atlantic Casualty on Jan. 1, 2016.

The outlooks reflect management’s near-term projections, which call for modest operating profits, as well as the expectation that management will operate in a manner that is consistent with the business plan presented to A.M. Best.

Negative rating actions could occur if underwriting or operating performance falls significantly below A.M. Best’s expectations or if risk-adjusted capitalization deteriorates significantly from expected levels. AOSIC’s ratings also may be impacted negatively if its relationship to Auto-Owners and its support change in a manner that no longer warrants rating enhancement.

Source: A.M. Best

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