A.M. Best Co., one of the nation’s largest rating agencies, has downgraded the financial strength rating of the Ohio Casualty Group to A (Excellent) from A+ (Superior).
The rating change reflects the group’s earnings deterioration, increased operating leverage and significant management changes. In 1999, the group’s combined ratio increased 8 points to 112 due largely to price inadequacy—particularly in commercial lines—catastrophe losses and restructuring expenses.
A.M. Best expects operating results to gradually improve over the next few years as rate increases and expense reductions are implemented. Additionally, operating leverage increased significantly in recent years due to the purchase of virtually all of the standard commercial lines business of Great American Insurance Co. in late 1998 and strong premium growth in 1999 with nearly a 20 percent decline in surplus.
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