OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit ratings (ICR) of “a-” of the members of the Allstate New Jersey Insurance Group (collectively referred to as Allstate New Jersey) (Bridgewater, NJ). The outlook for all ratings is stable. Allstate New Jersey’s ultimate parent is The Allstate Corporation (Allstate) (Northbrook, IL) [NYSE: ALL]. (See below for a detailed listing of the companies.)
The rating affirmations are based on Allstate New Jersey’s favorable risk-adjusted capitalization, improved underwriting trends and management’s local market knowledge. Allstate New Jersey continues to undertake various actions to enhance its overall operating results as the dedicated New Jersey property/casualty carrier for Allstate. In addition, Allstate New Jersey’s operating performance generally has benefited from its ability to quickly react to changing market conditions. Furthermore, the group’s private passenger automobile margins have improved due to recent rate activity, new business acceptance criteria and renewal book actions. To better match price with risk, Allstate New Jersey’s recent actions to improve its homeowners’ business have included rate increases, targeted customer/property inspections and a reduction in mono-line homeowners’ exposure. These actions, coupled with mild weather conditions, had a favorable impact on the group’s operating performance in each of the past two years. Additionally, the ratings acknowledge the operational and financial benefits Allstate New Jersey receives as an affiliate of Allstate Insurance Company, which is a market leader in the U.S. property/casualty insurance industry.
Allstate New Jersey’s positive rating factors are somewhat offset by its business concentration within one state, resulting in potential operating variability due to local market disruptions and localized catastrophic weather events. This exposure was evident in earlier periods as its homeowners and auto physical damage lines of business were negatively impacted by sizable net catastrophe losses. However, to reduce surplus volatility, Allstate New Jersey has maintained a conservative investment portfolio.
While the outlook for the ratings of Allstate New Jersey is stable, positive rating action may result from improved underwriting performance trends and capital preservation. The ratings could be downgraded if underwriting performance and/or capital levels fall materially short of A.M. Best’s expectations.
The FSR of A- (Excellent) and ICRs of “a-” have been affirmed for the following members of Allstate New Jersey Insurance Group:
- Allstate New Jersey Insurance Company
- Allstate New Jersey Property and Casualty Insurance Company
- Encompass Insurance Company of New Jersey
- Encompass Property and Casualty Insurance Company of New Jersey
- Esurance Insurance Company of New Jersey
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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Catastrophe Analysis in A.M. Best Ratings
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.
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