OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has downgraded the Financial Strength Rating (FSR) to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “a-” of The California Casualty Indemnity Exchange (San Mateo, CA) and its wholly owned subsidiaries: California Casualty General Insurance Company of Oregon (Portland, OR), California Casualty & Fire Insurance Company (San Mateo, CA) and California Casualty Insurance Company (Portland, OR). All of these companies comprise California Casualty Group (California Casualty). The outlook for the FSR has been revised to stable from negative, while the outlook for the Long Term ICR remains negative.
The ratings reflect California Casualty’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and marginal enterprise risk management.
California Casualty’s ratings are supported by the group’s solid level of capitalization. The ratings also reflect the benefits derived from California Casualty's extensive affiliations with various affinity trade groups that have provided it with a stable and mature policyholder base and excellent business persistency. Offsetting these factors is pressure on the operating performance from several years of adverse trends in underwriting results. While the core underwriting performance has been improving in recent years, the actual results still trail industry averages. While capital is currently well supportive on a risk-adjusted basis, certain balance sheet measures also are deteriorating as a product of operating performance declines.
Negative rating actions could occur with further degrading of the operating results, additional contraction in policyholder’s surplus, or strategic initiatives failing to improve underwriting performance.
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