A.M. Best Co. has upgraded the financial strength rating (FSR) to ‘B’ (Fair) from ‘B-‘ (Fair) and assigned an issuer credit rating (ICR) of “bb+” to National Automotive Insurance Company of Metairie, La. The outlook for both ratings is stable. Best said: “The FSR upgrade reflects National Auto’ s improved risk-adjusted capitalization, positive trend of operating income and extensive local market knowledge in Louisiana. The improved capital position is attributed to a reduction in underwriting leverage and favorable loss reserve development trends. In addition, a steady stream of investment and fee income has offset the company’ s variable underwriting performance over the past five years.
A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A-‘ (Excellent) and the issuer credit rating (ICR) of “a-” of Folksamerica Reinsurance Company (Folksamerica Re. Best also assigned an FSR of A- (Excellent) and an ICR of “a-” to Bermuda-based Fund American Reinsurance Company, Ltd. Best noted that both companies are subsidiaries of White Mountains Re Group Ltd. “a downstream intermediate holding company of White Mountains Insurance Group, Ltd. Best affirmed the ICR and senior debt rating of “bbb-” on $400 million 6.375% senior unsecured notes of White Mountains Re, as well as the preferred stock rating of “bb” on $250 million 7.506% non-cumulative perpetual preference shares. The outlook for all ratings is stable. “The three principal operating subsidiaries of White Mountains Re are Folksamerica Re, Fund American Re and Sirius International Insurance Corporation,” of Stockholm, Sweden,” said Best. “The rating affirmations of Folksamerica Re and White Mountains Re are based on both companies’ excellent level of risk-adjusted capitalization and enhanced risk management strategy. Partially offsetting these positive attributes are the historical volatility in operating performance, due in part to legacy issues at Folksamerica Re and dependence on the growth and profitability of the automobile insurance business assumed from one of their affiliated companies.”
A.M. Best Co. has downgraded the financial strength rating (FSR) to ‘B-‘ (Fair) from ‘B’ (Fair) and the issuer credit ratings (ICR) to “bb-” from “bb” of Penn Treaty American Corporation’s insurance subsidiaries. These include Penn Treaty Network America Insurance Company (Allentown, PA), American Network Insurance Company (Allentown, PA) and American Independent Network Insurance Company of New York (New York, NY). Best has also downgraded the ICR to “ccc” from “b-” of Penn Treaty. All of the ratings have been removed from under review with negative implications and assigned a negative outlook. Best made the rating changes following a review of Penn Treaty’ s unaudited 2006 GAAP financials. The rating agency said the filing confirms its “ongoing concerns that the company’ s ‘old co’ block (business written prior to 2002) continues to perform poorly. An unexpected $25 million pre-tax charge related to claim reserve strengthening was reported in the filing.” Best also indicated that the actual results were below its expectations. “While Penn Treaty is making some progress in gaining approval for much needed rate increases on the ‘old co’ business, the speed of which this is occurring and the fact that in a number of states Penn Treaty is not receiving the amount it has requested is delaying the rehabilitation of the problematic ‘old co’ block,” Best continued. “The company continues to state publicly it intends to recapture this business when it is in a financial position to do so. Furthermore, Penn Treaty continues to be reliant on one single reinsurer for financial support.”
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