OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a” of National Lloyds Insurance Company (National Lloyds). Concurrently, A.M. Best has revised the outlooks to negative from stable and affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” of American Summit Insurance Company (American Summit), National Lloyds’ affiliate. National Lloyds and American Summit are domiciled in Dallas, TX and are subsidiaries of Hilltop Holdings, Inc. (HTH) (NYSE:HTH), a financial holding company based in Texas.
The ratings reflect National Lloyds and American Summit’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The revised outlooks reflect National Lloyds and American Summit’s lower level of risk-adjusted capitalization due to anticipated significant dividend payments to its parent company in the coming months. Risk-adjusted capitalization has declined following the implementation of an aggressive capital management strategy. A.M. Best acknowledges the capital support National Lloyds received from HTH in the past and expects it to continue if needed.
National Lloyds has reported volatile underwriting results during the previous five-year period, which were driven by a variety of frequent and severe weather-related events, above-average expense structure and geographic concentration risk.
American Summit has reported generally profitable operating performance, generated by steady, but declining, investment income, other income and capital gains over the previous five-year period. Additionally, the ratings acknowledge the company’s stable loss reserving trends.
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