AM Best revises its outlook to negative for members of the pool of insurance companies NLC

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OLDUICK, NJ – () –AM Best changed the outlook from stable to negative and affirmed the financial strength rating of “A-” (“excellent”) and the long-term credit rating of the issuer “a-” (“excellent”) New London County Mutual Insurance Company, Hingham Mutual Fire Insurance Company, Thames Insurance Company, Inc. and Danbury Insurance Company, which operate under an intercompany agreement and are collectively referred to as the NLC pool of insurance companies (NLC).

NLK’s credit ratings (ratings) reflect the stability of its balance sheet, which AM Best estimates as strong, as well as adequate operating performance, a neutral business profile and good enterprise risk management (ERM).

The revised outlook from stable to negative is based on deteriorating trends in NLC’s operating performance in recent years, which largely reflects the increased frequency and severity of weather events and the unfavorable development of its core business. In addition, the increased costs associated with amortization of the new policy administration system and the higher fees typical of New England carriers contribute to the high underwriting cost ratio. Without sustained improvement, this could lead to a decrease in the overall assessment of operating performance in the near or medium term.

NLC maintains a strong overall balance sheet robustness, underpinned by very high risk-adjusted capitalization as measured by Best’s capital adequacy ratio, offset to some extent by limited surplus growth. Underwriting leverage ratios are maintained at levels comparable to total personal property income. NLC’s business profile is viewed as neutral as the geographical distribution of risk is strategically centered in Connecticut, Massachusetts and Rhode Island and spread through a strong network of independent agencies. AM Best reviews the ERM NLC structure, which includes a committee chaired by the CEO and other senior managers who collaborate to identify risks and develop appropriate risk mitigation procedures according to the risk profile.

This press release refers to the credit ratings published on the AM Best website. For all rating information pertaining to the issue and related disclosures, including details of the department responsible for assigning each of the individual ratings mentioned in this issue, see AM Best’s Recent rating activity Internet page. For more information on the use and limitations of credit rating scores, please review Best Credit Ratings Guide… For information on the proper use of Best’s Credit Ratings media and AM Best press releases, please review Media Guidelines – Proper Use of Best Credit Ratings and AM Best Rating Action Press Releases

AM Best is an international rating agency, news publisher and analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information visit www.ambest.com

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