A.M. Best Assigns Ratings to Indemnity National Insurance Company
OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” to Indemnity National Insurance Company (Indemnity National) (Jackson, MS). The outlook assigned to both ratings is stable.
The ratings and outlook reflect Indemnity National’s favorable operating performance, solid risk-adjusted capitalization and conservative underwriting and strategic positioning in its niche market, offering land reclamation surety bonds to coal mining companies. Partially offsetting these positive rating factors are the company’s geographic concentration of business and its limited product offering.
Indemnity National’s favorable operating performance is reflected in double-digit five-year averages for pre-tax return on revenue and total return on surplus, with the former measure significantly exceeding the fidelity and surety composite average. Results were driven by consecutive years of positive net underwriting income that was supplemented by steadily increasing net investment income. In addition, the company’s average underwriting expense ratio and combined ratio both compared favorably to the composite averages. Operating results benefit from uniform enforcement of a federal law that applies to the reclamation of mined land.
Partially offsetting these positive rating factors are Indemnity National’s geographic concentration of risk, as more than 95% of its premium is written in a single state, and its limited product offering. However, these factors are partially mitigated by management’s experience and knowledge of its niche market and because the company’s losses are not driven by weather.
There could be pressure on Indemnity National’s ratings and/or outlook if its operating performance were to deteriorate or its risk-adjusted capitalization were to weaken.
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.
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