Harleysville, Old Mutual and 14 Others See Ratings Updates
Sun Life's rating affected by its exiting of U.S. variable annuity and individual insurance markets; Chartis Select, Nippon Life Insurance and ING Life Japan receive updates as well.
Insurance Networking Ratings Corner, January 24, 2012
A.M. Best, Fitch Ratings, Moody’s Investors Service and Standard & Poor’s (S&P’s) released ratings updates. The following are some of the most recent:
Bremen Farmers Mutual Insurance Co.
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A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb” of Bremen Farmers Mutual Insurance Co. (Bremen).
The revised outlook reflects Bremen’s continued volatile underwriting results, due to its geographic concentration of property risks in Kansas. This exposes the company to significant wind and hail losses. This was evident particularly in recent years, as severe storms generated significant claims and loss of surplus. Nevertheless, modest underwriting leverage measures and investment income have contributed to Bremen’s maintaining adequate risk-adjusted capitalization.
Further downward rating movement could occur in the near term, if Bremen continues to produce unprofitable results. This would further erode its surplus position, particularly in the event of continued, frequent weather-related losses.
Chartis Select Insurance Co.
Fitch has withdrawn the 'A' Insurer Financial Strength (IFS) ratings with stable outlooks of Chartis Select Insurance Co. (Chartis Select).
The action follows the companies' mergers into National Union Fire Insurance Co. of Pittsburgh PA (National Union) and Lexington Insurance Co. (Lexington), respectively. Landmark and Chartis Select no longer exist as legal entities.
National Union Fire Insurance Co. of Pittsburgh PA and Lexington Insurance Co. are indirect subsidiaries of American International Group Inc.
Fitch has affirmed the long-term Issuer Default Rating (IDR) of Coventry Health Care Inc. (Coventry) at 'BBB' and has affirmed the 'BBB-' ratings on the company's senior unsecured securities. The rating outlook remains stable.
The ratings affirmation reflects Fitch's view that Coventry's recent operating performance remains solid for the current rating category, although it has weakened, relative to very strong results posted in 2010.
For the first nine months of 2011, the company reported an EBIT operating margin (excluding realized investment gains and impact of litigation settlements) of 6.8 percent, compared to 9.1 percent in the year-ago period.
The year-over-year deterioration was due, primarily, to a higher medical loss ratio that was, nonetheless, in line with Fitch's expectations and Coventry's prior guidance.
Farmers and Mechanics Fire and Casualty Insurance Co.
A.M. Best has assigned a financial strength rating (FSR) of B++ (Good) and issuer credit rating (ICR) of “bbb+” to Farmers and Mechanics Fire and Casualty Insurance Co. (FMF&C). The outlook assigned to both ratings is stable.
Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and the ICR of “a-” of Farmers and Mechanics Mutual Insurance Co. of West Virginia (the Mutual). The outlook for both ratings is stable.
The ratings are based on FMF&C’s adequate risk-adjusted capitalization, historical trend of consistent underwriting income and leadership by the Mutual.
The company is a wholly owned stock subsidiary of the Mutual, and currently writes personal automobile and liability coverages only in West Virginia. In addition, the Mutual provides sales, underwriting, claims, accounting, data processing, administrative and investment services to FMF&C. FMF&C was funded in August 2006 with an initial $2.5 million stock investment from the Mutual to support the group’s expansion into automobile, artisans liability and umbrella coverages.
GHS Property and Casualty Insurance Co.
A.M. Best has downgraded the financial strength rating to B++ (Good) from A- (Excellent) and issuer credit rating to “bbb+” from “a-” of GHS Property and Casualty Insurance Co. (GHS). The outlook for both ratings is negative.
The rating downgrades reflect GHS’ trend of underwriting losses that has continued into 2011 and resulted in significant decline in its surplus. The company’s five-year-average combined ratio is significantly worse than the private passenger automobile composite. GHS’ management has implemented risk management strategies, increased rates and began exiting the Oklahoma property market, where frequent and severe catastrophic events were the primary cause of the company’s underwriting losses.
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