OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlook to positive from stable and affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of The Service Insurance Company, Inc. (SIC) (West Orange, NJ).
The revised outlook reflects SIC’s excellent risk-adjusted capitalization, consistently favorable pre-tax operating income and conservative investment and underwriting philosophy. The company’s surplus growth is attributable to profitable underwriting income and a steady stream of net investment income. Surplus has increased annually since 2005 with only a modest decline posted in 2012 and has continued to grow through the first half of 2015.
These positive rating factors are partially offset by the company’s limited business profile and small surplus level. Historically, SIC has offered one product with a concentration in New Jersey and New York, with some business written in neighboring states. The geographical concentration exposes surplus to changes in the judicial, competitive and legislative environments. However, product offerings have expanded through diversification of classes and products written, and the company has identified opportunities within its niche while adhering to strict underwriting guidelines. Overall, all lines continue to run favorable loss ratios. As a result, the company’s combined ratio has been at or below 100% since 2000. Positive rating pressure may occur following a period of profitable growth with commensurate increases expected to surplus through organic earnings.
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