AM Best Affirms Credit Ratings of California Insurance Company and Its Affiliates

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of California Insurance Company (Foster City, CA) and its affiliates, which are collectively referred to as North American Casualty Group (NAC). The outlook of these Credit Ratings (ratings) is stable. (Please see below for a detailed listing of the companies and ratings.)

The ratings reflect NAC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

NAC’s ERM assessment has been revised to appropriate from marginal, in recognition of material strengthening of the group’s ERM and governance infrastructure in recent years, as well as significant de-risking of the company’s overall risk profile, including reductions in the group’s Schedule BA investments. While NAC’s protracted legal dispute over a conservatorship order is ongoing, the potential adverse financial consequences can be viewed as immaterial at this point in time. AM Best will continue to monitor the situation and respond if necessary.

Concurrently, NAC’s operating performance assessment has been revised to adequate from strong, reflecting AM Best’s view that its recent and prospective underwriting results and overall operating metrics currently align with peers that have an adequate assessment. As the company has grown its presence by diversifying by product line and geography, its operating performance has fallen to levels that no longer consistently outperform the group’s benchmark. At the same time, AM Best recognizes the progress that NAC has made in gaining traction in products outside of workers’ compensation, which historically constituted the large majority of its premiums, but has shrunk materially in the face of persistent rate deterioration. If these diversifying business lines prove to be profitable as these businesses progress, it would likely enhance AM Best’s view of NAC’s business profile.

The FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) have been affirmed with stable outlooks for the following affiliates of California Insurance Company, which are collectively referred to as NAC:

• American Atlantic Assurance Co. Ltd.
• Continental Indemnity Company
• Florida Casualty Insurance Company
• Illinois Insurance Company
• Oklahoma Property and Casualty Insurance Company
• Pennsylvania Insurance Company
• Texas 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.

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.

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