AM Best Downgrades Credit Ratings of Crusader Insurance Company and Unico American Corporation; Places Credit Ratings Under Review With Negative Implications

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to B (Fair) from B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb+” (Fair) from “bbb” (Good) of Crusader Insurance Company (Crusader). Concurrently, AM Best has downgraded the Long-Term ICR to “b” (Marginal) from “bb” (Fair) of Crusader’s parent company, Unico American Corporation (Unico). These Credit Ratings (ratings) have been placed under review with negative implications. Both companies are domiciled in Calabasas, CA.

The ratings reflect Crusader’s balance sheet strength, which AM Best assesses as strong, as well as its weak operating performance, limited business profile and marginal enterprise risk management.

The rating downgrades of Crusader reflect a revision in AM Best’s assessments of its balance sheet strength to strong from very strong and operating performance to weak from marginal. While current risk-adjusted capital levels remain at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), the lowered assessment of balance sheet strength reflects the persistent erosion of Crusader’s policyholder surplus due to continued operating losses. In addition, based on Unico’s most recent filing, there is substantial doubt that Unico will have sufficient cash to meet its operating and liquidity requirements as they become due over the next 12 months. Although Crusader maintains sufficient liquidity, it may be adversely impacted by liquidity issues at Unico, which is already experiencing reduced financial flexibility. The rating downgrades also reflect Crusader’s unfavorable operating performance trends from 2016 through June 30, 2021, which have been primarily attributable to unprofitable underwriting results.

The under review with negative implications status reflects doubts raised regarding Unico’s ability to continue to operate as a going concern and AM Best’s expectation of continued pressure on Crusader’s balance sheet strength. To meet its capital obligations, Unico is currently considering multiple capital and liquidity alternatives. Each of these come with some level of execution risk or may not come to fruition at all. Therefore, the ratings of Crusader and Unico will remain under review while AM Best continues to hold discussions with the management team to discuss the progress of their plans to address the liquidity issues at Unico.

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 use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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