A.M. Best Affirms Ratings of the Members of Nonprofits Insurance Alliance Group
OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit ratings of “a” of the members of Nonprofits Insurance Alliance Group (NIAG): Alliance of Nonprofits for Insurance, Risk Retention Group (ANI) and National Alliance of Nonprofits for Insurance (NANI) (both domiciled in Montpelier, VT), as well as Nonprofits’ Insurance Alliance of California, Inc. (NIAC) (Santa Cruz, CA). The outlook for all ratings is stable.
The ratings recognize the group’s excellent capitalization and operating performance, its strong management and effective niche market strategy. The ratings also consider the benefits derived and the companies’ strategic roles within the group, including the national platform provided by ANI, which is controlled, not owned, by NIAG. A.M. Best considers that ANI, NANI and NIAC function as a group, with the common mission of serving nonprofit organizations through common management of human resources and information technology, while administration, underwriting, marketing, claims and risk management services are provided by Alliance Member Services. Despite the lack of common ownership, A.M. Best expects that the respective boards of directors would act to support all entities within the group. Accordingly, A.M. Best deviated from its “Rating Members of Insurance Groups” rating methodology in regards to the lack of common ownership among the group members.
Partially offsetting these positive rating factors are the companies’ limited size and the challenges associated with managing a growing book of business, geographical expansion and establishing market positions in the face of competition.
NIAC and ANI provide a range of liability coverages to 501(c)(3) nonprofit organizations—NIAC in California and ANI in all other states. NANI provides property coverages for nonprofit organizations insured by ANI and NIAC through a fronting arrangement. Despite significant business growth in the past five years, the companies have been able to maintain conservative leverage measures. The companies’ capitalization levels are protected by solid reinsurance protection from leading global reinsurance groups. They also are supported by conservative reserving and investment approaches. In addition, all three benefit from their nonprofit, tax-exempt status and from the experience and success of NIAC, which has a leading market position serving California nonprofits. This success reflects the group’s expertise, strong customer focus and commitment to the nonprofit sector, as member retentions are very high.
Positive rating actions are unlikely in the near to intermediate term, as its operating performance and capital position already have been considered in A.M. Best’s ratings process. However, negative rating actions could occur if its Best’s Capital Adequacy Ratio (BCAR) score declines, operating performance and risk profile deteriorate, insured losses deplete capital, or significant changes and turnover occur in its management. Also, downward pressure could occur if NIAG’s risk management controls and tolerances deteriorate.
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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