A.M. Best Downgrades Ratings of Constitutional Casualty Company

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has downgraded the financial strength rating to D (Poor) from C+ (Marginal) and issuer credit rating to “c” from “b-” of Constitutional Casualty Company (Constitutional) (Chicago, IL). The outlook for both ratings is negative.

“Risk Management and the Rating Process for Insurance Companies”

The rating actions reflect Constitutional’s weak level of capitalization following several years of underwriting losses and its trend of negative operating income. The recent operating losses were significant and reflect the company’s geographic concentration of risk that exposes it to weather-related events.

These negative factors are partially offset by the company's five-year average pure loss ratio that was slightly better than the composite average. The rating outlook is based on the potential for continued deterioration of capital and disruption of the company’s operating strategies.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; and “A.M. Best’s Ratings & the Treatment of Debt.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.