AM Best has placed under review with negative implications the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” of California Capital Insurance Co. and its subsidiaries Eagle West Insurance Co., Monterey Insurance Co. and Nevada Capital Insurance Co.
The rating actions follow management’s discussion with A.M. Best regarding the potential losses related to the Camp and Woolsey wildfires in California in November.
“Based upon current estimates, gross ultimate losses will far exceed losses previously contemplated in Capital’s ratings,” A.M. Best stated in an announcement on the rating change issued on Friday.
The status reflects the need for A.M. Best to fully assess the financial and operational impacts of the wildfire activity and Capital’s response to these events. Despite the expected gross and net losses, risk-adjusted capital currently remains supportive of the ratings, according to A.M. Best.
Fitch Ratings recently said it expects the November wildfires in California to have some but not great impact on property/casualty insurers’ year-end results and it anticipates limited or no rating actions due to the fires. A number of the largest property insurance writers in California have already pre-announced 4Q18 wildfire loss estimates and primary carrier net losses reported have tended to be relatively limited as reinsurance programs absorbed a considerable amount of the losses, according to Fitch.
However, November wildfire events have led to the regulatory seizure of Merced Insurance Co. by California officials. Merced is a small regionally concentrated homeowners insurer.
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