OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term ICR of “bb” of Nations Insurance Company (Nations) (Cerritos, CA). The outlook of the FSR remains stable.
The Credit Ratings (ratings) reflect Nations’ balance sheet strength, which AM Best categorizes as adequate, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.
The revised outlook for the Long-Term ICR to positive from stable is based on the recent improvement of Nations’ operating performance and risk-adjusted capitalization, driven by increased underwriting earnings and investment income, which led to solid surplus growth. In addition, Nations implemented a 50% quota share reinsurance contract effective Jan. 1, 2017, which reduced its net underwriting leverage significantly. This quota share reinsurance was increased to 60% effective Jan. 1, 2018. Furthermore, Nations has implemented rate increases in recent years, which have enhanced its net underwriting income, and increased investment allocation to long-term bonds from short-term investments, which has increased its net investment yield and net investment income.
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