OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of First Colonial Insurance Company (First Colonial) (Jacksonville, FL). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect First Colonial’s balance sheet strength, which AM Best categorizes as very strong, as well as its weak operating performance, neutral business profile and appropriate enterprise risk management.
The ratings recognize the company’s volatile and unprofitable underwriting performance over the past few years, which is influenced by a host of economic factors, including auto sales and loans. First Colonial’s loss ratio has trended upward due to elevated losses associated with its Guaranteed Auto Protection (GAP) product. In an effort to improve the GAP loss experience, management has implemented a host of mitigation initiatives, which include rate increases, enhancements to its pricing segmentation and various other risk management actions. In addition, management is focusing its business mix to more profitable products in the vehicle services and ancillary automobile spaces. As a result of these actions, operating results improved in 2018 and through the first nine months of 2019.
The ratings continue to reflect the company’s strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The ratings also benefit from the explicit and implicit support provided by The Allstate Corporation (Allcorp), its ultimate parent. As a subsidiary of Allcorp, First Colonial benefits from its expansive market presence and brand-name recognition.
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