A.M. Best Downgrades Georgia-Based Century Casualty Co.

A.M. Best has downgraded the financial strength rating (FSR) to B (Fair) from B+ (Good) and the issuer credit rating (ICR) to “bb+” from “bbb-” of Century Casualty Co. based in Alpharetta, Ga. The outlook for the FSR has been revised to stable from negative, while the outlook for the ICR remains negative.

The downgrade reflects deterioration of Century Casualty’s underwriting results, with underwriting and operating losses reported since 2013. The weakness in underwriting performance has primarily stemmed from hotel/motel and convenience store accounts written in 2013 and 2014, as well as management’s decision to strengthen case reserves on several accounts within the discontinued 40 percent quota share with Occidental Fire & Casualty Company of North Carolina (Occidental).

Century Casualty currently participates in a 15 percent quota share with Occidental, effective Sept. 1, 2014. As a result of the operating losses, Century Casualty’s policyholders’ surplus has declined in recent years. Still, Century Casualty maintains adequate risk-adjusted capitalization driven by low underwriting leverage and a conservative investment portfolio.

The negative outlook for the ICR reflects A.M. Best’s expectation of moderate underwriting losses in the near term as set forth by management, and challenges the company faces to improve underwriting results.

Negative rating actions could occur if deterioration in underwriting performance leads to a decline in the company’s risk-adjusted capitalization. Positive rating actions could occur if there are sustained profitable operations supported by an appropriate level of risk-adjusted capital.

Source: A.M. Best

Topics Underwriting AM Best Georgia Casualty