AM Best Revises Issuer Credit Rating Outlooks to Negative for Members of CSAA Insurance Group

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to negative from stable for the Long-Term Issuer Credit Ratings (Long-Term ICRs) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) of CSAA Insurance Exchange (Walnut Creek, CA) and its pooled subsidiaries and reinsured affiliates. The outlook of the FSR is stable. All companies are collectively referred to as CSAA. (See below for a detailed listing of companies.)

The Credit Ratings (ratings) reflect CSAA’s balance sheet strength, which AM Best assesses as strongest, as well as its marginal operating performance, favorable business profile and appropriate enterprise risk management.

The revision of Long-Term ICRs outlooks to negative from stable for CSAA is driven by the group’s reduction in capital level, which resulted in lower risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR) (albeit still at the strongest level) and underwriting leverage deterioration. The capital drop was driven by much higher than anticipated claims cost and material reserve strengthening. There is a concern that any additional stress can put pressure on the current balance sheet assessment. CSAA is working on several capital-bolstering initiatives, which if implemented, can restore risk-adjusted capitalization measures closer to historical levels.

Operating results fluctuated over the last several years and deteriorated in 2023, with the combined ratio reaching 114% compared with 99.7% in 2022. The non-catastrophic loss ratio saw significant increase due to inflationary cost pressures for auto claims. CSAA expects its combined ratio to improve through 2024, due to sizeable rate increases combined with new initiatives focused on underwriting profitability. Business retention continues to be strong and there is a material new premium growth in commercial auto segment.

The FSR of A (Excellent) and the Long-Term ICRs of “a+” (Excellent) have been affirmed, with the Long-Term ICRs outlooks revised to negative from stable and the FSR outlook maintained at stable, for the following members of CSAA:

• CSAA Insurance Exchange
• CSAA Affinity Insurance Company
• CSAA General Insurance Company
• CSAA Fire & Casualty Insurance Company
• Fortential Insurance Company
• Mobilitas General Insurance Company
• Mobilitas Insurance Company
• Mobilitas Insurance Company of Arizona

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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