A.M. Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the financial strength rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb” of National Independent Truckers Insurance Co., A RRG (NITIC) of Charleston, S.C. The outlook of the FSR remains stable.
The credit ratings reflect NITIC’s balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The positive Long-Term ICR outlook reflects the company’s strong overall balance sheet from prudent risk management, and A.M. Best’s expectation that the company will continue to improve its risk-adjusted capital position and operating performance. Surplus has benefited from NITIC’s extensive risk management program to produce underwriting profits in the difficult line of commercial automobile liability, supplemented by capital contribution requirements for policyholders in their first five years of risk retention group (RRG) membership.
According to A.M. Best, the rating affirmations reflect the company’s consistently strong operating performance demonstrated by comparison of its past five calendar years and five-year average combined ratios to A.M. Best’s commercial auto composite average. NITIC has continually produced pure net loss ratios well below the five-year composite average due to its robust risk management program and membership selectivity.
Best said these factors are offset somewhat by the company’s limited business profile due to its narrow geographic scope and mono-line business orientation. Vulnerability to “key man” risk is another area of concern, Best said, as it pertains to the organization’s heavy dependence on one individual for management, direction and execution of its business strategy.
Positive rating action could occur in the medium term if the company continues to consistently increase surplus through operating profits and member capital contributions. Positive rating action also could occur if the company is able to demonstrate further stability in underwriting results. Negative rating action could occur if underwriting profitability trends weaken and/or there is material deterioration in the company’s risk-adjusted capital adequacy.
Negative rating action also could occur with a sudden change in key management, which might lead to a divergence in the company’s operating strategy and performance.
Source: A.M. Best
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