A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A+ (Superior) and issuer credit ratings (ICR) of “aa-” of Commerce Group, its lead company, The Commerce Insurance Company, and four inter-company pool members. Best also affirmed the ICR of “a-” of Commerce’s parent holding company, The Commerce Group, Inc., which recently was acquired by Spanish insurer, MAPFRE, S.A. In addition Best affirmed the debt rating of “a-” of $300 million 5.95 percent senior unsecured notes due 2013 of The Commerce Group Inc. The outlook for all ratings is stable. ” The ratings,” said Best, “reflect Commerce’s solid capitalization, consistently strong operating performance and local market expertise. In addition, Commerce’s wholly owned subsidiaries, Commerce West Insurance Company (Pleasanton, CA) and American Commerce Insurance Company (Columbus, OH), provide geographic diversification and rate flexibility to the group.” Partially offsetting the positive factors are “the group’s concentration of business in Massachusetts and limited product scope, which is focused on private passenger automobile.”
A.M. Best Co. has placed the financial strength rating (FSR) of ‘A-‘ (Excellent) and issuer credit rating (ICR) of “a-” of Aspen Specialty Insurance Company (ASIC), of Bismarck, ND) under review with developing implications. The rating actions reflect the recent decision by ASIC’s ultimate parent, Bermuda-based Aspen Insurance Holdings, Limited “to revise ASIC’s immediate business plans and the uncertainty regarding ASIC’s ultimate role in the United States,” Best explained. The rating agency also noted that “ASIC voluntarily stopped writing new and renewal business as of January 1, 2008. Substantially all new and renewal excess and surplus lines business previously written by ASIC is written by its foreign affiliate, Aspen Insurance UK Limited (AIUK).” Aspen has in formed Best “that a new business plan detailing revised near and long-term strategies for ASIC was being developed,” the bulletin continued. “Among the options being considered include substantial reinsurance support of ASIC’s business by AHL’s other non-U.S. operating companies, which currently maintain FSRs of ‘A’ (Excellent) and ICRs of “a.” Best said the ratings would “remain under review pending receipt and analysis of ASIC’s forthcoming revised business plan and further discussions with management. A.M. Best expects these events to occur within the next 60 to 90 days.”
A.M. Best Co. has upgraded the issuer credit rating (ICR) to “bbb+” from “bbb” for the Medical Mutual Insurance Company of Maine (MMIC) and affirmed the financial strength rating (FSR) of ‘B++’ (Good). The outlook on both ratings is stable. “The ratings reflect MMIC’s excellent risk-adjusted capitalization, recent favorable operating earnings, leadership position within the medical professional liability markets in which it operates and its high policyholder retention rate,” Best noted. “The rating also recognizes the actions taken by management to restore and sustain operating profitability, including the implementation of indicated premium rate increases from 2001 through 2005, scheduled credit and discount decreases and continued efforts to maintain prudent loss reserves in response to previous adverse loss trends. Recent operating earnings also benefited from improved claim frequency and moderating claim severity.”
A.M. Best Co. has upgraded the financial strength rating FSR to ‘B++’ (Good) from ‘B+’ (Good) and removed the FSR from under review with negative implications for New Jersey-based Kodiak Insurance Company. Best has also assigned Kodiak an issuer credit rating (ICR) of “bbb+” to Kodiak. The outlook assigned to both ratings is stable. “Kodiak’s FSR was placed under review with negative implications in June 2007 following the announcement that Kodiak’s immediate parent, Hermitage Insurance Company of White Plains, N.Y., had reached a definitive purchase agreement to acquire American Resources Insurance Company (ARIC),” Best explained. Under the terms of the agreement, Kodiak was to merge with and into ARIC. “Although the purchase of ARIC has subsequently fallen through,” best continued, “these actions reflect Kodiak’s improved underwriting results, supportive risk-adjusted capitalization and enhanced business profile as Kodiak has entered into a business renewal rights agreement with ARIC, excluding the unfavorable auto warranty line of business.” Best also noted: “These factors are furthered by the explicit support provided by Hermitage, as well as the financial flexibility of the ultimate parent, Brookfield Asset Management Inc.” [
A.M. Best Co. has revised the rating outlook to positive from stable and affirmed the financial strength rating (FSR) of ‘B++’ (Good) for Hermitage Insurance Group (HIG) and its member, Hermitage Insurance Company (See above). Best also assigned an issuer credit rating (ICR) of “bbb+” to HIG and Hermitage. The outlook for all ratings is positive. The outlook assigned to the ICRs is also positive. “These ratings and outlook reflect HIG’s sustained profitability, strong risk-adjusted capitalization and enhanced business profile,” said Best. “These factors are furthered by the explicit support provided by Hermitage’s ultimate parent, Brookfield Asset Management Inc.” The rating agency also noted that the Company’s management has “successfully applied more stringent underwriting guidelines and standards,” in recent years, which, “along with the rising rate levels brought about by the hardened market, have led to improved underwriting performance. Best explained: “The ratings and outlook also recognize the benefits derived from HIG’s business renewal rights agreement with American Resources Insurance Company (ARIC)”, following Hermitage’s failed purchase attempt. “In December 2007, Hermitage entered into a 100 percent quota share reinsurance agreement with ARIC whereby Hermitage assumed all policies written by ARIC, excluding those issued in the auto warranty line of business, with an effective date of October 1, 2007.” Upon termination of that agreement on January 1, 2008, a new agreement was concluded between ARIC and Kodiak Insurance Company – as detailed above. Best also explained that “HIG has hired ARIC’s staff, obtained ARIC’s agency plant and will provide run-off claims management services to ARIC.”
A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of ProAssurance Group and its group rated members. Best also revised the outlook to positive from stable and affirmed the ICR of “bbb-” and senior debt rating of “bbb-“on $107.6 million 3.9 percent senior unsecured convertible debentures, due 2023 of ProAssurance’s parent holding company, ProAssurance Corporation (PRA). In addition Best has revised the outlook to positive from stable and upgraded the ICR to “bb+” from “bb” and affirmed the FSR of ‘B’ (Fair) of Woodbrook Casualty Insurance, Inc. of Birmingham, Ala. Best has also affirmed the FSR of ‘A-‘ (Excellent) and ICR of “a-” of Physicians Insurance Company of Wisconsin, Inc. as well as the FSR of’ B++’ (Good) and ICR of “bbb” of NCRIC, Inc. of Washington, DC. The outlook for these ratings is stable. Best explained: “The ratings of ProAssurance reflect its excellent risk-adjusted capitalization, strong operating performance, specialty expertise and leading business position within the medical professional liability insurance sector.” Best also said it “recognizes ProAssurance’s significant geographic diversification, which has been made possible largely by PRA’s successful growth strategy via mergers and acquisitions. PRA’s most recent acquisitions of NCRIC (2005) and PIC Wisconsin (2006) have been smoothly integrated into ProAssurance’s operations. The ratings also consider the financial flexibility the operating companies, which is derived from PRA.”
A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A++’ (Superior) and issuer credit ratings (ICR) of “aa+” of United States Liability Insurance Group of Wayne, PA and its members. The outlook for all ratings is stable. “The ratings reflect US Liability’s strong capitalization, outstanding long-term underwriting and operating performance, conservative underwriting leverage and management’s proven track record.” Best also said it “recognizes the group’s inherent financial flexibility, which results from its affiliation with Berkshire Hathaway, Inc.” In addition, Best noted that the “ratings reflect the explicit support provided to US Liability’s business through a 50 percent quota share reinsurance agreement and a loss portfolio transfer agreement of existing reserves with affiliate National Indemnity Company, an indirectly owned subsidiary of Berkshire Hathaway Inc. US Liability is a leading specialty lines insurer with operations conducted throughout the United States. The group writes low hazard products, which include commercial property and liability, professional liability, liquor liability, personal lines and non-profit package products.”
The FSR of A++ (Superior) and the ICRs of “aa+” have been affirmed for United States Liability Insurance Group and its following members:
Mount Vernon Fire Insurance Company
U.S. Underwriters Insurance Company
United States Liability Insurance Company
A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘D’ (Poor) and issuer credit rating (ICR) of “c” of Texas-based Provident American Insurance Company with a negative outlook. “Subsequently, Best said it has “withdrawn the ratings and assigned a category NR-4 (Company Request) to Provident American in response to management’s request that the company be removed from A.M. Best’s interactive rating process.” Best explained that the “ratings reflect Provident American’s weak risk-adjusted capital position along with the low absolute level of capital as the company operates in run off. This is despite consistent capital support from its parent, Sonic Financial Corp. The weak capital position is primarily due to substantial net operating losses over the last five-year period in its core and ancillary lines of business.” Best added that it expects “these operating losses to continue for the foreseeable future and believes that Provident American does not have the ability to meet its policyholder obligations going forward without the capital support from its parent.”
A.M. Best Co. has upgraded the financial strength rating (FSR) to ‘C++’ (Marginal) from ‘C+’ (Marginal) and issuer credit rating to “b” from “b-” of Hereford Insurance Company of Long Island City, NY), and has revised its outlook for both ratings to stable from negative. “The ratings upgrades,” Best explained, “reflect Hereford’s improved risk-adjusted capitalization resulting from a continued decline in underwriting leverage measures. This decline has been driven by a moderation in growth in premium volumes, increases in net retentions, continued operating profitability and organic growth in surplus. The ratings also reflect Hereford’s historic underwriting and operating profitability, both of which exceed industry averages and are derived from the company’s niche market position of focusing on New York City’s transportation industry.”
A.M. Best Co. has downgraded the financial strength rating (FSR) to ‘B’ (Fair) from B+ (Good) and issuer credit rating (ICR) to “bb+” from “bbb-” of Chicago-based Polish Roman Catholic Union of America (PRCUA), and has revised the outlook on both ratings to stable from negative. “These rating actions are based on PRCUA’s continuing net operating losses in each of the last five years, elevated level of risk in its investment portfolio from equity market volatility, spread compression associated with its current fixed annuity reserve base and potential exposure to disintermediation risk,” said Best. “Spread compression, due to generous crediting rates, and a high expense structure are the main drivers of PRCUA’s operating losses in recent years.”
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