OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa+” of the property/casualty (P/C) members of Houston Casualty Group. The lead P/C members are headquartered in Houston, TX, with the exception of HCC Reinsurance Company Limited (Hamilton, Bermuda). AM Best also has affirmed the FSR of A++ (Superior) and the Long-Term ICR of “aa+” of HCC Life Insurance Company (HCC Life) (Indianapolis, IN). The outlook of these Credit Ratings (ratings) remains stable. (See below for a list of the P/C companies.)
The ratings of the P/C members of the group reflect their consolidated balance sheet strength, which AM Best categorizes as strongest, as well as their very strong operating performance, favorable business profile and very strong enterprise risk management (ERM) of the consolidated operations.
The P/C companies continue to record very strong operating performance across extended time periods and multiple underwriting cycles. This recognizes consistency in underwriting results driven by enhanced pricing sophistication and risk optimization along with investment returns that continue to exceed industry levels by a significant margin. Proactive management of capital levels includes retaining earnings to provide balance sheet capacity for the risk profile and appetite. The ratings also recognize the group’s position as a considerably well-diversified specialty market leader that encompasses product, jurisdiction and distribution. The ratings also consider the operational, financial and ERM support provided by Tokio Marine & Nichido Fire Insurance Co., Ltd., which is the lead insurance operating company in the Tokio Marine Holdings, Inc. organization. These factors include day-to-day operational synergies across its U.S.-based subsidiaries, reinsurance support and economic capital modeling that is superior to peer companies.
The ratings of HCC Life reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and very strong ERM. The ratings also reflect the rating enhancement it receives from its affiliation with the Houston Casualty Group.
HCC Life continues to maintain the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Capital and surplus has increased over the five most recent years despite the acquisition of American International Group, Inc.’s medical stop-loss (MSL) operations in 2017. While profitability ratios have declined in recent years due to declining investment yields and a modest increase in its loss ratio, HCC Life’s disciplined underwriting approach and ongoing expense management has resulted in favorable earnings over the recent periods. HCC Life contributes an increasing portion of Houston Casualty Group’s overall premium and earnings and continues to strengthen its leadership position in the MSL insurance marketplace. Partially offsetting these positive rating factors is HCC Life’s significant concentration in the MSL line of business.
The FSR of A++ (Superior) and the Long-Term ICRs of “aa+” have been affirmed for the following members of the Houston Casualty Group:
- Houston Casualty Company
- Avemco Insurance Company
- U.S. Specialty Insurance Company
- HCC Reinsurance Company Limited
- American Contractors Indemnity Company
- United States Surety Company
- Producers Agriculture Insurance Company
- Producers Lloyds Insurance Company
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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