Ratings Agencies Take Action on 10 Insurers
Insurance Networking News, December 15, 2009
A.M. Best, Fitch Ratings, and Standard & Poor’s (S&P) released ratings updates. The following are some of the most recent:
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Cherokee Insurance Co. and Oakland Financial Corp.
A.M. Best Co. revised the outlook to positive from stable, and affirmed the financial strength rating (FSR) of A- (excellent) and issuer credit rating (ICR) of “a-” of Cherokee Insurance Co. Concurrently, A.M. Best revised the outlook to positive from stable and affirmed the ICR of “bbb-” of Cherokee’s parent company, Oakland Financial Corp. Both companies are domiciled in Sterling Heights, Mich.
The revised outlook reflects Cherokee’s improvement in risk-adjusted capitalization through Sept. 30, 2009, continued solid underwriting and operating performance, despite the negative impact that recessionary pressures and ongoing competitive pressures are having on its core trucking book of business, as well as its historically conservative loss reserving practices, the rating agency says.
The ratings reflect Cherokee’s solid risk-adjusted capitalization, profitable operating earnings and the financial support provided by Oakland, as evidenced by historical capital contributions and reinsurance support through an affiliated entity, A.M. Best says.
S&P withdrew its “A-“ counterparty credit rating on CNA Insurance Co. Ltd., which is an operating insurance company of CNA Financial Corp. (CNAF). The insurer financial strength (IFS) rating on CNAF's operating insurance subsidiaries is “A-.”
The withdrawal is based on the fact that the guarantee provided by Continental Casualty Co. was needed only to enhance the financial strength of CNA Insurance Co. Ltd., according to S&P. When a guarantee is used to enhance the FSR on an insurance company through the guarantee of only policy obligations, that entity will not have a counterparty credit rating because the guarantee does not support non-policyholder obligations, the rating agency says.
The withdrawal of the “A-“ counterparty credit rating on CNA Insurance Co. Ltd. has no negative implications for the “A-“ FSR on the company.
S&P placed its CCC counterparty credit rating on Conseco Inc. on CreditWatch with positive implications. Conseco's financial flexibility has improved, with amended bank covenants pushing more restrictive debt covenants out over the next several years, the rating agency says.
InterGlobal Insurance Co. Ltd.
A.M. Best Co. affirmed the FSR of B++ (good) and ICR of “bbb+” of InterGlobal Insurance Co. Ltd. The outlook for both ratings is stable.
The ratings reflect the company’s good prospective operating performance, improving business position and adequate level of risk-adjusted capitalization.
InterGlobal has achieved a good underwriting performance since its inception, despite a rapid growth in premium income and challenging market conditions, A.M. Best says. The rating agency anticipates that a good level of operating performance will be achieved in both 2009 and 2010, and believes that InterGlobal is likely to continue growing premium income in 2010 and 2011, despite the currently difficult market conditions.
National General Insurance Corp. N.V. and Nagico Insurance Co. Ltd.
A.M. Best Co. assigned an FSR of B++ (good) and ICR of “bbb” to National General Insurance Corp. (NAGICO) N.V. (NAGICO) and Nagico Insurance Co. Ltd. (NICL). The outlook assigned to all ratings is stable.
These rating actions reflect NAGICO and NICL’s common ownership, adequate consolidated risk-adjusted capitalization, dominant market presence in its domestic market and overall profitability in recent years.
On a consolidated basis, the companies have reported overall operating profits in recent years, which has enabled them to enhance capitalization through the retention of earnings, given their common parent company’s minimal dividend requirements, the rating agency says. Consequently, both companies continue to maintain more than adequate risk-adjusted capitalization for their current business profiles.
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