OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” of National Fire and Casualty Company (NFC) (Chicago, IL). The outlook of the FSR is stable, while the outlook of the Long-Term ICR is negative. Concurrently, AM Best has withdrawn these public Credit Ratings (ratings).
The ratings reflect NFC’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).
The negative Long-Term ICR outlook reflects NFC’s surplus erosion from increased underwriting losses and equity market volatility. The company’s balance sheet is pressured further from its limited scale, elevated common stock leverage and high percentage of lower quality bonds relative to the composite. Despite the deterioration, NFC continues to maintain the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). NFC’s marginal operating performance reflects deteriorating trends in underwriting and operating performance, partially driven by an uptick in loss severity. AM Best considers NFC’s business profile to be limited, as it operates within a niche market in Illinois and Indiana. AM Best views the company’s ERM practices as appropriate for the size and scope of operations.
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