Ratings Recap: Sublimity, USPlate Glass, Cameron Mutual

May 22, 2012

A.M. Best Co. has upgraded the financial strength rating (FSR) to ‘A-‘ (Excellent) from ‘B++’ (Good) and issuer credit rating (ICR) to “a-” from “bbb+” of Oregon-based Sublimity Insurance Company, and has revised its outlook on both of the ratings to stable from positive. Best has also affirmed the FSR of’ A-‘ (Excellent) and ICR of “a-“of United Heritage Life Insurance Company and the FSR of ‘B++’ (Good) and ICR of “bbb” of United Heritage Property & Casualty Company. Both companies are domiciled in Meridian, Idaho, and are members of United Heritage Financial Group, Inc. (UHFG). The outlook for these ratings is stable. “The upgrades reflect Sublimity’s excellent capitalization and consistently favorable underwriting performance, along with its long-standing local market presence as a personal lines writer in Oregon, Utah and Idaho,” Best explained. As partial offsetting factors best cited “the company’s somewhat concentrated book of business compounded by its exposure to potential weather-related losses and a relatively high expense structure. Sublimity’s positive rating factors are derived from management’s persistent efforts to improve underwriting results, which include re-underwriting efforts, rate increases and termination of unprofitable agents.” Best also noted that “operating results have significantly improved in recent years as a result of these initiatives, coupled with generally milder weather conditions in most years. Sublimity also benefits from the explicit and implicit support it receives as a member of UHFG.” However, Best also indicated that “Sublimity’s property book, which has experienced variable operating results stemming from its geographic concentration in Oregon, which may subject the company to weather-related loss exposure, potentially adverse legal and regulatory conditions, as well as competitive market pressures,” should be considered as negative rating factors. “Compounding this is Sublimity’s somewhat elevated expense structure. All of these issues will be monitored carefully as the company continues a period of planned premium expansion.” Best added that, while it does not “expect to downgrade/or place a negative outlook on the ratings of Sublimity in the near to midterm, such actions would ensue if the group were to incur material losses in its capitalization; have a severe reduction in the profitability of its core book of business; be unable to contain exposure to catastrophic events within its underwriting footprint with the current set of preventative measures; be unable to contain its current growth pattern; or have substantial adverse reserve development relative to its peers and the industry’s averages.”

A.M. Best Co. has upgraded the financial strength rating to ‘A’ (Excellent) from ‘A-‘ (Excellent) and issuer credit rating to “a” from “a-” of Illinois-based USPlate Glass Insurance Company, and has revised its outlook on both ratings to stable from positive. “The rating actions reflect USPlate’s sustained underwriting and operating profitability, excellent capitalization and its niche market position as the leading mono-line insurer of plate glass in the United States,” Best explained. “These ratings also take into consideration management’s specialty underwriting expertise, prudent risk management practices and the distinct competitive advantages afforded by its long-standing reputation in this market. These rating factors are furthered by USPlate’s risk management practices, its adoption and utilization of catastrophe modeling and its purchase of increased reinsurance coverage limits since Hurricane Wilma.” Best indicated that the “purchase was done in part to accommodate the rise in insured values, to answer demand by the company’s policyholders for higher limits and USPlate’s continued practice to limit its potential net catastrophe loss exposure to a 1-in-250-year catastrophe event.” Best said that in the future “negative rating actions could occur if USPlate’s capitalization falls markedly short of Best’s expectations as a result of substantial damage caused by a natural catastrophe in Florida. Given USPlate’s limited business scope, the ratings also are subject to any sudden shifts within its core market niche or a drastic change in its business profile.”

A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of ‘B+’ (Good) and issuer credit ratings of “bbb-” of Missouri-based Cameron Mutual Insurance Company and its wholly owned subsidiary, Cameron National Insurance Company. Best explained that the revised outlook of Cameron reflects its “concerns regarding the company’s historical trend of operating losses and the challenges facing management to improve its results. The ratings of Cameron also recognize its adequate capitalization and long-standing market presence in its key operating states of Missouri and Arkansas.” As partial offsetting factors Best cited “the company’s exposure to weather-related losses due to its geographic concentration in the Midwest and its elevated underwriting leverage. Negative rating actions could occur if there were an unexpected and material decline in Cameron’s risk-adjusted capitalization, continued deterioration in its operating performance or a diminishing of its liquidity measures over the next several years.”

Was this article valuable?

Here are more articles you may enjoy.