AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of Dearborn, Michigan-based Auto Club Insurance Association and its wholly owned subsidiaries, Auto Club Group Insurance Co., MemberSelect Insurance Co., Auto Club Property-Casualty Insurance Company, Meemic Insurance Co. and Fremont Insurance Co. (collectively referred to as Auto Club Group.)
The ratings reflect Auto Club Group’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.
The positive rating outlooks reflect a trend of improved operating performance, which has resulted in more stabilized operating returns in recent years. The improved operating performance trends follow a series of underwriting actions that the group initiated in earlier years to stabilize results.
These actions included several rate revisions, product enhancements, improved risk segmentations and evolving risk management processes. As a result of these changes, the group’s five-year averages for return on revenue and equity are more than double its 10-year averages. Additionally, Auto Club Group has reported net income in the past five consecutive years.
The rating affirmations for the members of Auto Club Group are supported by risk-adjusted capitalization that AM Best assesses at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), slightly offset by elevated gross underwriting leverage.
In addition, the ratings recognize the group’s well-established position as a personal lines market leader in Michigan, as well as the benefits derived from offering insurance products to AAA members. Furthermore, management has developed and implemented a risk management framework that appropriately addresses the risks inherent in its profile, and its risk management capabilities generally meet or exceed its risk profile.
Source: AM Best
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