AM Best Upgrades Credit Ratings of Subsidiaries of New Jersey Manufacturers Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating (FSR) to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “aa” (Superior) from “a” (Excellent) of New Jersey Casualty Insurance Company (NJC), New Jersey Indemnity Insurance Company (NJI) and New Jersey Reinsurance Company (NJRe). Concurrently, AM Best has affirmed the FSR of A+ (Superior) and Long-Term ICR of “aa” (Superior) of New Jersey Manufacturers Insurance Company (NJM). The outlook of these Credit Ratings (ratings) is stable. All aforementioned companies are wholly owned subsidiaries of NJM, the ultimate parent. All companies are headquartered in West Trenton, NJ.

The ratings reflect NJM’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management.

The rating upgrades of NJC, NJI and NJRe are a result of NJM’s ratings being extended through a reinsurance contract between NJM and all subsidiaries that went into effect on Jan. 1, 2022.

Over the past five years, policyholder surplus has increased by nearly 55%. Surplus appreciation has been dampened somewhat by an annual dividend paid to policyholders. However, this dividend is part of the group’s capital management strategy and a strong retention tool. Underwriting leverage measures although somewhat elevated in relation to the composite have improved during this time frame, as surplus gains have outpaced premium expansion.

Operating results continue to be strong mainly due to solid performance in the group’s investment portfolio that has generated a steady stream of net investment income, as well as realized and unrealized capital gains. Pre-dividend results are solid; however, overall net underwriting income is impacted by the annual dividend. Somewhat offsetting this is the group’s low underwriting expense structure, which compares favorably with the composite. NJM is a market leader in New Jersey, with a large market share in both personal and commercial lines products. At year-end 2021, New Jersey accounted for nearly 94% of all direct premium written. However, the group currently operates in seven states, and a strategic plan is in place to continue to improve its geographic diversification.

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