OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Utica Mutual Insurance Company (Utica Mutual) (New Hartford, NY) and its subsidiaries. Additionally, A.M. Best has assigned an FSR of A- (Excellent) and an ICR of “a-” to Utica Mutual’s subsidiary, Utica National Insurance Company of Ohio (Utica Ohio) (Columbus, OH). Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of “a-” of Founders Insurance Company (Founders) (Des Plaines, IL). The outlook for all ratings is stable. (See below for a detailed list of the companies and ratings.)
The ratings of Utica Mutual reflect its solid risk-adjusted capitalization, strong management culture and presence in its target markets. The company also has brand-name recognition within schools, graphic arts and errors and omissions markets.
Offsetting these strengths are Utica Mutual’s elevated expense structure, the earnings drag from asbestos-related charges and the impact of weather-related losses on its underwriting results in the most recent years. The outlook reflects A.M. Best’s expectations that future results will stabilize and show more consistency.
The ratings assigned to Utica Ohio are based on a 100% quota share agreement with Utica Mutual. Utica Ohio’s ratings recognize the explicit support provided by this reinsurance agreement as all business produced by Utica Ohio is ceded to Utica Mutual.
The ratings of Founders acknowledge its supportive level of risk-adjusted capitalization, the benefits derived from its 2010 affiliation with Utica Mutual and its specialty niche expertise in writing non-standard automobile, liquor liability and general liability coverages.
Offsetting these positive rating factors is Founders’ elevated underwriting expense measures driven primarily by high agency commissions and its recently increased loss activity. Going forward, Founders is expected to benefit from Utica Mutual’s underwriting expertise and cross-selling opportunities.
A.M. Best believes Utica Mutual and Founders are adequately positioned at their current rating levels. However, negative rating actions could occur if supportive levels of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), are not maintained or if underwriting results do not improve and operating earnings do not begin to stabilize.
The FSR of A- (Excellent) and ICRs of “a-” have been affirmed for Utica Mutual Insurance Company and its following operating subsidiaries:
- Graphic Arts Mutual Insurance Company
- Republic-Franklin Insurance Company
- Utica National Assurance Company
- Utica National Insurance Company of Texas
- Utica Lloyd’s of Texas
- Utica Specialty Risk Insurance Company
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; “The Treatment of Terrorism Risk in the Rating Evaluation”; and “Catastrophe Analysis in A.M. Best Ratings.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.