AM Best Revises Outlooks to Positive for Lebanon Valley Insurance Company, Affirms Credit Ratings of Tuscarora Wayne Insurance Company and Its Affiliate

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” (Good) of Lebanon Valley Insurance Company (Lebanon Valley). Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) of Tuscarora Wayne Insurance Company and its affiliate, Keystone National Insurance Company. Together these companies are collectively referred to as Tuscarora Wayne Companies. The outlook of the FSR is stable, while the outlook of the Long-Term ICRs is negative. All companies are domiciled in Wyalusing, PA.

The Credit Ratings (ratings) of Lebanon Valley reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings also reflect rating enhancement via the explicit and implicit support provided as an affiliate of Tuscarora Wayne Companies.

The revised outlooks to positive from stable for Lebanon Valley reflect its consistent surplus growth, with growth reported in each of the past nine years, generally favorable loss reserve development and low underwriting leverage metrics that compare favorably with the composite’s average. The strong balance sheet strength is supported further by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The adequate operating performance reflects a modest amount of volatility in recent years, with underwriting losses in 2021 and 2023; however, Lebanon Valley has reported net income in each of the past nine years. The limited business profile reflects the company’s geographic concentration in Pennsylvania and focus on commercial business. The company is a part of the ERM program employed by Tuscarora Wayne Companies and is considered appropriate for the company’s risk profile.

The ratings of Tuscarora Wayne Companies reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate ERM.

The negative outlook of the Long Term ICRs of Tuscarora Wayne Companies reflects recent volatility that deviates from historical norms. On a long-term basis, the book of business had performed strongly for a number of years; however, results have not reported the same level of strength in more recent periods, in part owing to greater weather activity, as well as the impact of fire losses, both experiencing elevated severity amid inflationary conditions. Nonetheless, there is an observed level of improvement in the most current year. The group’s very strong balance sheet strength assessment continues to be supported by the strongest level of risk-adjusted capitalization, as measured by BCAR, solid liquidity and generally consistent and favorable loss reserve development, partially offset by dividends to its parent, which has limited surplus growth somewhat. The neutral business profile continues to focus on underserved commercial business exposures with moderate geographic diversification. AM Best considers Tuscarora Wayne Companies’ ERM program to be appropriate for the group’s risk profile and includes prudent reinsurance protection and comprehensive risk management.

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