OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Ratings (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) for the members of Nodak Insurance Group (Nodak). The outlook of the FSR is stable. Concurrently, AM Best has revised the outlook to negative from stable and affirmed the Long-Term ICR of “bbb+” (Good) of NI Holdings, Inc. (Fargo, ND) [NASDAQ: NODK], a publicly traded holding company. (See below for a full listing of companies and Credit Ratings [ratings].)
The ratings reflect Nodak’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The revised outlook of the Long-Term ICRs considers the deterioration in Nodak’s operating results over the past two years, primarily resulting from an abnormal level of catastrophe losses in its core states of operation, along with an increased severity of loss due to inflation. In 2022, the group incurred multiple severe weather-related events, all of which were in the vicinity of its catastrophe retention, and in the year prior, results were dampened by significant conditions impacting the crop lines. Consequently, the group’s combined ratio has been above breakeven for two consecutive years and reached a five-year high of 118.5% in 2022. Also in 2022, underwriting losses coupled with unrealized capital losses due to stock market volatility resulted in the group reporting a nearly 20% decline in policyholders’ surplus.
Nodak’s management is addressing the volatility through rate, inflation guard adjustments, aggressive re-underwriting of its book of business, non-renewing particular coverages and requiring higher deductibles. The group also continues to perform property inspections and will no longer be accepting certain property risks. AM Best expects that these actions will allow Nodak to improve upon its current level of performance and return back to historical norms. Although given the magnitude of the decline, in the absence of improvement, the ratings are likely to be downgraded.
The FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) have been affirmed, with the outlook of the Long-Term ICRs revised to negative from stable, while the outlook of the FSR is stable, for the following members of the Nodak Insurance Group:
- American West Insurance Company
- Battle Creek Mutual Insurance Company
- Direct Auto Insurance Company
- Nodak Insurance Company
- Primero Insurance Company
- Westminster American Insurance Company
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 Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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