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” (Excellent) of Protective Property & Casualty Insurance Company (Protective P&C) (St. Louis, MO). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Protective P&C’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also reflect rating lift from its parent, Protective Life Insurance Company (Protective Life).
AM Best’s balance sheet strength assessment is based on the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), good asset quality, adequate balance sheet liquidity and yearly organic surplus growth derived from retained earnings, partially offset by annual dividends to the parent. The balance sheet strength is somewhat diminished by Protective P&C’s extensive use of unrated dealer-owned reinsurance arrangements. AM Best considers the company’s operating performance to be adequate based on its consistent track record of profitability, with return metrics and underwriting ratios that remain on par with its composite peer group of warranty insurers.
Protective P&C specializes in providing coverage for vehicle service contracts and guaranteed asset protection products for automobiles, marine craft, power sport vehicles and recreational vehicles, sold primarily through franchise dealers and independent agents. The neutral business profile reflects the company’s concentration of underwriting risk in the highly competitive auto warranty market, offset by geographic diversification. The company’s ERM is appropriate for its risk profile and is integrated with that of its parent, Protective Life.
Rating enhancement has been afforded to Protective P&C due to the implied support from its higher-rated parent, its integration into the organization and its support of the organization’s asset protection strategy.
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