OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Central Co-operative Insurance Company (Central Co-operative) (Baldwinsville, New York).
The outlook revisions to positive are based on consistent underwriting and operating measures over the past five years, which experienced minimal volatility and continued to outperform the company’s peer group. Despite being a single state writer in New York, the company has managed to mitigate weather-related losses and consistently post a below break-even combined ratio year-over-year. Through 2016, Central Co-operative’s combined ratio was the lowest in the last five-year period, demonstrating high quality underwriting and extensive inspection processes.
The ratings affirmations reflect strong risk-adjusted capitalization, which is reflective of low underwriting leverage, a high quality investment portfolio and stable loss reserving trends. Additionally, Central Co-operative maintains a comprehensive reinsurance program to shield results from geographical concentration risk and mitigate tail risk.
Partially offsetting these rating factors are the company’s geographical concentration of risk and an elevated expense structure that is impacted by the commission expense, although not uncommon for companies that utilize independent agencies. In 2016, the common stock leverage increased to a level higher than the industry average.
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