OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the issuer credit rating (ICR) outlook to negative from stable and affirmed the financial strength rating (FSR) of C (Weak) and the ICR of “ccc+” of United Automobile Insurance Company (United Auto) (Miami, Florida). The outlook for the FSR remains stable.
The ratings reflect United Auto’s elevated underwriting leverage and volatile underwriting performance over recent years. These factors contributed to the marginal level of risk-adjusted capitalization. United Auto’s five-year average pre-tax and total returns on revenue and equity are negative, net underwriting leverage remains elevated, and the company’s combined and operating ratios compare unfavorably with the non-standard auto composite. Significant reserve strengthening occurred in most of the past five years relating to the personal injury protection line in Florida and adverse development from its Texas operations. Furthermore, the company’s limited product and geographic concentration has exposed the company to regulatory and judicial concerns. The negative outlook reflects the recent decline in operating performance and policyholders’ surplus.
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