AM Best Withdraws Credit Ratings of Crusader Insurance Company and Unico American Corporation

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to C++ (Marginal) from B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “b” (Marginal) from “bb+” (Fair) of Crusader Insurance Company (Crusader). AM Best also has downgraded the Long-Term ICR to “ccc-” (Weak) from “b” (Marginal) of Crusader’s parent company, Unico American Corporation (Unico). In addition, AM Best has maintained the under review with negative implications status for these Credit Ratings (ratings). Concurrently, AM Best has withdrawn these ratings at the request of the company to no longer participate in AM Best’s interactive rating process. Both companies are domiciled in Calabasas, CA.

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

The rating downgrades follow Crusader’s announcement that it has entered into an Administrative Supervision Agreement with the California Department of Insurance (CDI). The supervision agreement was requested by the CDI because of its expressed concerns regarding Crusader’s financial stability and the potential effects on Crusader and its California policyholders of any potential bankruptcy of Unico. The supervision agreement, among other things, provides for the appointment by the CDI of a special examiner to provide supervision and regulatory oversight of Crusader. It also imposes limitations on Crusader’s ability to take certain actions without the prior written consent of the California Insurance Commissioner, the special examiner, or the special examiner’s appointed representative. At this time, Crusader’s outgoing claims payments are not expected be limited or delayed. Additionally, there is nothing in the agreement between the CDI and Crusader that should restrict Crusader or Unico from pursuing a sale or a restructuring of Crusader subject to regulatory approvals and requirements.

While Crusader maintains sufficient liquidity, and its risk-adjusted capital levels remain at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), the downgrades reflect the lowered assessment of the balance sheet strength given the enterprise’s diminished financial flexibility and the constraints imposed on Crusader by the CDI.

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.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.