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’ 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.
A.M. Best expects the group’s future operating performance to be stable, but strong, and the stable earnings profile should further support the group to control its growth and business writings consistent with its capital and surplus position.
Positive rating impact is unlikely in the near term, as its operating performance and capital position already have been considered in the ratings process. Negative rating impact could occur if underwriting performance shows decline and demonstrates volatility impacting negatively on earnings and capitalization over time. Negative rating impact could occur if there is a material shift in risk profile that could potentially undermine the stability and profitability of the company.
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