OLDWICK, N.J.--()--A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of B (Fair) and issuer credit rating of “bb+” of Nations Insurance Company (NIC) (Cerritos, CA).
“Risk Management and the Rating Process for Insurance Companies”
These rating actions recognize NIC’s enhanced risk-adjusted capitalization and positive net income growth in recent years. In addition, the ratings consider the company’s conservative investment philosophy, tempered premium growth and management’s local market knowledge.
These positive rating factors are somewhat offset by NIC’s variable underwriting performance since inception in 2008. As a single-state nonstandard private passenger automobile writer in California, the company also remains susceptible to adverse changes in the judicial, legislative and economic environments, as well as increased competition.
The positive outlook reflects A.M. Best’s expectation that the ratings may be upgraded in the near term if NIC can continue its trends of positive operating performance and favorable risk-adjusted capitalization. However, if the company’s underwriting performance should decline, the positive outlook could be reconsidered.
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” and “Understanding BCAR for Property/Casualty Insurers.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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