OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb+” (Good) from “a-” (Excellent) for Trans City Casualty Insurance Company (TCC) and Trans-City Life Insurance Company (TCL). Both companies are domiciled in Scottsdale, AZ. The outlook of these Credit Ratings (ratings) has been revised to stable from negative.
The ratings of TCC reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The rating downgrades reflect deterioration in underwriting results, which has resulted in operating performance that no longer supports the strong assessment. The continued decline in operating performance has been driven by increased claim activity and negative development, particularly in more recent years. Furthermore, the company has experienced a consistent decline in premium volume and will remain challenged to grow its business. As a result, key operating performance metrics, such as return on equity, underwriting cash flows and its expense ratio have been negatively impacted.
TCC’s balance sheet strength reflects the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and a high quality investment portfolio with solid liquidity. The limited business profile assessment reflects TCC’s risk exposure writing guaranteed cost workers’ compensation insurance and contractual liability for vehicle service contracts for auto dealerships and groups in Arizona. AM Best views the company’s ERM practices as appropriate for its risk profile.
In addition, the ratings also reflect TCL’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate ERM.
The rating downgrade of TCL reflects the removal of rating enhancement from TCC. TCL offers credit life and credit disability insurance coverage exclusively to automobile dealers in Arizona that have an ownership interest, in line with the company’s founding principles.
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 Guide to 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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