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A.M. Best has downgraded the issuer credit rating to “bbb” from “bbb+” and affirmed the financial strength rating of B++ (Good) of Nevada General Insurance Co.
The outlook for the ICR has been revised to stable from negative while the FSR outlook remains stable.
Nevada General is a nonstandard personal automobile writer in Nevada, N.M., Arizona and California that, together with Enumclaw Property & Casualty Insurance Co., are wholly-owned subsidiaries of Enumclaw, Wash.-based Mutual of Enumclaw Insurance Co.
Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and the ICR of “a-” of Mutual of Enumclaw Insurance Co. and Enumclaw Property & Casualty Insurance Co., along with the stable outlooks.
The rating actions reflect Nevada General’s trend of operating performance, which has been inconsistent and below average on a five-year basis, according to A.M. Best
“Underwriting losses have driven the unfavorable underwriting performance along with above average operating expenses in the non-standard automobile line of business,” A.M. Best stated in a release announcing the downgrade. “This has been particularly evident recently in New Mexico. The non-standard automobile market has continued to struggle, as that market faces competitive pressures from larger standard auto writers entering the market and creating competition for preferred business. The company’s geographic risk remains heavily concentrated in Nevada and the company also reports an elevated expense ratio that is higher than the composite average.”
Partially offsetting the negative rating factors are the company’s “adequate risk-adjusted capitalization,” as well as strategies implemented within the past few years designed to improve overall profitability, the ratings agency said
The actions undertaken include rate increases, increasing fee income and a gradual change from a captive agency distribution channel to an independent agency network, and the company believes these changes will gradually occur in the coming years and significantly reduce underwriting expenses and improve profitability. Furthermore, management is planning to increase its writings in Arizona to achieve additional geographic diversification, according to A.M. Best.
According to Nevada General’s web site they are “among the industry leaders” in specialty auto market.
The company was purchased in 2010 as part of a larger purchase by Mutual of Enumclaw’s buyout of Chicago-Vegas Holding Co., which at the time owned Nevada General. At that time the company was “A” “Excellent” by A.M. Best.
According to Hoovers.com, Nevada General reports $13.6 million in annual sales. Nevada General Insurance Co. was formed in 1993 by Robert B. Feldman.