Ratings Recap: Computer, FirstComp

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit rating of “a” of Providence RI-based Computer Insurance Company, both with stable outlooks. Best said the ratings reflect Computer Insurance Company’s “outstanding profitability, conservative operating strategy and management’s specialty underwriting expertise within its captive niche market. The rating outlook is based upon the company’s strong operating margins and low underwriting leverage.” In addition best noted that the ratings also acknowledge the advantages derived from Computer Insurance Company’s affiliation with its immediate parent, Hewlett-Packard Financial Services (HPFS), and the synergies gained from the company’s effective low-cost distribution platform, as well as preferential access to its insureds via the customer network of its ultimate parent, Hewlett-Packard Company.” The principle product offered by Computer Insurance Company provides extended maintenance to HP customers. The hardware policy, branded as Recover-All Service, provides extended coverage protection from a wide range of natural and man-made disasters, accidents and environmental hazards in a data center following a covered loss. Periodically, Computer Insurance Company dividends accumulated earnings to HPFS, most recently $20 million in the third quarter of 2009.

A.M. Best Co. has assigned a financial strength rating of ‘B++’ (Good) and issuer credit rating of “bbb+” to Omaha-based FirstComp Insurance Company both with stable outlooks. Best noted that on October 15, 2010, Markel Corporation completed its acquisition of Aspen Holdings Inc., the immediate parent of FirstComp. The ratings “reflect FirstComp’s adequate risk-adjusted capitalization, favorable historical and prospective underwriting performance and its profile as a provider of workers’ compensation and employers’ liability coverages for small, main street businesses in underserved rural markets across 31 states,” Best explained. “The ratings of FirstComp also are afforded rating enhancement based on the capital resources available from Markel, including the 50 percent quota share agreement made with a Markel affiliate, Evanston Insurance Company, which covers all business written after November 1, 2010, and the $31.5 million equity infusion made to FirstComp in the fourth quarter of 2010 to offset reserve strengthening.”