OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of National Security Fire and Casualty Company (NSFC). In addition, A.M. Best has affirmed the FSRs of B+ (Good) and Long-Term ICRs of “bbb-” of NSFC’s wholly owned subsidiary, Omega One Insurance Company, Inc. (Omega), and the affiliated life/health insurer, National Security Insurance Company (NSIC).
Concurrently, A.M. Best has affirmed the Long-Term ICR of “bb” of the parent holding company, The National Security Group, Inc. (NSGI) (Wilmington, DE) [NASDAQ: NSEC]. The outlook of these Credit Ratings (ratings) is stable. All companies are domiciled in Elba, AL, unless otherwise specified.
The ratings of NSFC are based on the consolidation of the company with its wholly owned subsidiary, Omega. The ratings and outlooks for NSFC reflect the improved operating performance and capitalization along with the stability and planning to eliminate its holding company debt. Management has developed a long-term plan to reduce holding company debt, and the insurance subsidiaries’ earnings will assist in the process. Additionally, A.M. Best expects management’s strategic initiative to further enhance operating performance by streamlining operations and consolidating departments to positively impact earnings in 2017.
Partially offsetting these positive rating factors is the geographic concentration of its operations in the southeastern United States. As a property writer, surplus is exposed to the impact of frequent and severe weather-related events.
The ratings of Omega reflect its strong risk-adjusted capitalization and low underwriting leverage. A.M. Best expects Omega’s capitalization to continue to improve, and earnings should remain positive mainly from investment income and favorable loss reserve development.
In affirming NSIC’s ratings, A.M. Best anticipates the company’s financial resources will not be impacted materially, as it supports the overall expense and debt obligations of NSGI. The ratings also acknowledge NSIC’s solid stand-alone risk-adjusted capitalization, modest capital growth, positive – albeit modest – net operating performance trends and its multiple distribution channel strategy.
Offsetting these positive factors are NSIC’s limited geographic profile and the challenges it faces to manage its limited capital levels, sustain and improve its overall net operating performance and reverse declining total net premium trends.
This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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