A.M. Best Downgrades Issuer Credit Rating of Nevada General Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has downgraded the issuer credit rating (ICR) to “bbb” from “bbb+” and affirmed the financial strength rating (FSR) of B++ (Good) of Nevada General Insurance Company (Nevada General) (Las Vegas, NV). The outlook for the ICR has been revised to stable from negative while the FSR outlook remains stable. Nevada General is a nonstandard personal automobile writer in Nevada, New Mexico, Arizona and California that, together with Enumclaw Property & Casualty Insurance Company (Enumclaw, WA), are wholly-owned subsidiaries of Mutual of Enumclaw Insurance Company (MOE) (Enumclaw, WA).

Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and the ICR of “a-” of Mutual of Enumclaw Insurance Company and its fully reinsured subsidiary, Enumclaw Property & Casualty Insurance Company, along with the stable outlooks.

The rating actions reflect Nevada General’s trend of operating performance, which has been inconsistent and below average on a five-year basis. Underwriting losses have driven the unfavorable underwriting performance along with above average operating expenses in the non-standard automobile line of business. This has been particularly evident recently in New Mexico. The non-standard automobile market has continued to struggle, as that market faces competitive pressures from larger standard auto writers entering the market and creating competition for preferred business. The company’s geographic risk remains heavily concentrated in Nevada and the company also reports an elevated expense ratio that is higher than the composite average.

Partially offsetting these negative rating factors are the company’s adequate risk-adjusted capitalization and several strategies implemented within the past few years designed to improve overall profitability. The actions undertaken include rate increases, increasing fee income and a gradual change from a captive agency distribution channel to an independent agency network. The company believes these changes will gradually occur in the coming years and significantly reduce underwriting expenses and improve profitability. Furthermore, management is planning to increase its writings in Arizona to achieve additional geographic diversification.

Negative rating action could occur if the company experiences material losses in its capitalization, a continued lack of underwriting stability in its core book of business, or substantial adverse reserve development relative to their peers, as well as the industry’s averages. Factors that may lead to positive rating action include additional operational and financial support from the parent company, Mutual of Enumclaw, or an improvement in underwriting performance to generate consistent and positive surplus growth.

This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151216005906/en/

A.M. Best Company
Lewis DeLosa, (908) 439-2200, ext. 5529
Financial Analyst
[email protected]
or
Rick Decker, (908) 439-2200, ext. 5423
Assistant Vice President
[email protected]
or
Christopher Sharkey, (908) 439-2200, ext. 5159
Manager, Public Relations
[email protected]
or
Jim Peavy, (908) 439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company

You May Also Be Interested In

• Major Shareholder Announcement
• GAC Group Named to Fortune Global 500 for 14 Consecutive Years, Highlighting Continued Global Growth
• InterContinental Hotels Group PLC Announces Transaction in Own Shares - July 31