AM Best has upgraded the Financial Strength Rating (FSR) to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “aa-” (Superior) from “a+” (Excellent) of Atlantic Casualty Insurance Company (Atlantic Casualty) (Goldsboro, NC). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
Concurrently, AM Best has affirmed the FSR of A++ (Superior) and the Long-Term ICRs of “aa+” (Superior) of Auto-Owners Insurance Company (Auto-Owners) (Lansing, MI) and its four wholly owned property/casualty (P/C) companies that compose Auto-Owners Insurance Group (AOIG). At the same time, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) for the members of Concord Group Insurance Companies (Concord Group), which is led byConcord General Mutual Insurance Company (Concord General) (Concord, NH). AM Best has also affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of Auto-Owners Specialty Insurance Company (AOSIC) (Dover, DE). Also, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of California Capital Insurance Company (Monterey, CA) and its subsidiaries, which operate under an intercompany pooling arrangement, collectively referred to as Capital Insurance Group (Capital). In addition, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa-” (Superior) ofAuto-Owners Life Insurance Company (AOLIC) (Lansing, MI), which is also a wholly owned subsidiary of Auto-Owners. The outlook of these ratings is stable. (See below for a detailed listing of the companies).
The ratings of Atlantic Casualty reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The rating upgrades of Atlantic Casualty reflects its increased level of integration, as well as tangible operating benefits and synergies derived from ownership by Auto-Owners in various functions including, but not limited to: investments; actuarial services; product development; reinsurance; claims; marketing; and information technology. In addition, this rating action recognizes Atlantic Casualty’s strategic importance within the Auto-Owners’ organization, particularly evident in the company’s access to Auto-Owners’ distribution channel, which has contributed to growth in premiums, while maintaining favorable operating performance.
The ratings of AOIG reflect its balance sheet strength, which AM Best assesses as strongest, as well as its very strong operating performance, favorable business profile and appropriate ERM.
AOIG has exhibited generally improved operating performance in recent years. AOIG also maintains a business profile that is well-balanced between personal and commercial lines, and property/casualty (P/C) business. Through its acquisition of Atlantic Casualty and AOSIC in 2016, its affiliation with Concord General in 2017 and its acquisition of Capital in 2019, AOIG has further broadened its business profile from a product and geographic perspective. These positive rating factors are offset partially by its exposure to credit risk associated with the Michigan Catastrophic Claims Association.
The ratings of Concord Group reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate ERM.
Concord Group’s ratings reflect its risk-adjusted capitalization, which is assessed in the strongest category, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its favorable operating performance in recent years. The ratings also reflect Concord Group’s strategic position within the Auto-Owners’ organization, as well as the significant operating and financial benefits that Concord Group has realized as a result of its April 2017 affiliation with Auto-Owners.
The ratings of AOSIC reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, very limited business profile and appropriate ERM.
AOSIC is a shell company that plans to provide excess and surplus lines coverage to small- and medium-size commercial businesses in North Carolina. AOSIC’s risk-adjusted capitalization is supportive of its business plan, which includes moderate premium growth projections. In addition, the company is led by a management team with a track record of generating favorable operating results at its sister company, Atlantic Casualty, and possessing extensive knowledge of the surplus lines and commercial P/C business. These positive rating factors are offset partially by the expected concentration of non-admitted business in one state.
The ratings of Capital reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate ERM.
Capital’s ratings reflect its risk-adjusted capitalization, which is assessed in the strongest category, as measured by BCAR, as well as the group’s recent improvement in operating performance. The ratings also reflect the substantial explicit and implicit support received from Auto-Owners since December 2018, which followed severe net losses and surplus erosion due in part to the California wildfires in 2017 and 2018, as well as adverse reserve development on prior accident years in 2017.
The ratings of AOLIC reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate ERM.
The ratings consider AOLIC’s integral role and positive contribution to its P/C parent organization, diversified product portfolio, its favorable level of risk-adjusted capitalization and high quality investment portfolio.
The FSR of A++ (Superior) and the Long-Term ICRs of “aa+” (Superior) have been affirmed, each with a stable outlook, for Auto-Owners Insurance Company and its wholly owned P/C subsidiaries:
- Home-Owners Insurance Company
- Owners Insurance Company
- Property-Owners Insurance Company
- Southern-Owners Insurance Company
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed, each with a stable outlook, for the following members of Concord Group Insurance Companies:
- Concord General Mutual Insurance Company
- Green Mountain Insurance Company, Inc.
- State Mutual Insurance Company
- Sunapee Mutual Fire Insurance Company
- Vermont Accident Insurance Company, Inc.
The FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) have been affirmed, each with a stable outlook, for the following members of Capital Insurance Group:
- California Capital Insurance Company
- Eagle West Insurance Company
- Monterey Insurance Company
- Nevada Capital Insurance Company
Source: AM Best
