Best Affirms National Interstate and Subs ‘A’ Ratings

February 15, 2011

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a+” of Ohio-based National Interstate Group and its members. Best also affirmed the ICR of “bbb+” of the group’s publicly traded parent, National Interstate Corporation.

The outlook for all ratings is stable.

These rating actions “reflect the group’s very strong operating results, excellent risk-adjusted capitalization, its leadership position in its core niche passenger transportation market and diverse product structure,” Best explained. The ratings also “reflect the additional financial flexibility provided by National Interstate, which maintains modest financial leverage and very strong interest coverage ratios.”

As partial offsetting factors, Best cited the “group’s business concentration in the passenger and truck transportation industries and the inherent risk in new business, particularly growth in the group’s alternative risk transfer programs, which now comprise approximately 56 percent of its gross written premiums, as well as the risks associated with the group’s 2010 acquisition of Vanliner Group, Inc.”

Best added that the stable outlook recognizes its expectation that “the group’s diverse product structure and specialty focus will continue to generate positive earnings while maintaining solid risk-adjusted capital over the near term, despite increasing competitive pressures, challenging macro economic conditions and the integration risks associated with the Vanliner Group, Inc. acquisition.”

Best summarized the companies affected by the ratings action as follows:
The FSR of A (Excellent) and ICRs of “a+” have been affirmed for National Interstate Group and its following members:
• National Interstate Insurance Company
• National Interstate Insurance Company of Hawaii, Inc
• Triumphe Casualty Company
• Vanliner Insurance Company

Source: A.M. Best

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