TMCnet News
A.M. Best Downgrades Ratings of Greenville Casualty Insurance CompanyA.M. Best has downgraded the financial strength rating to B- (Fair) from B (Fair) and the issuer credit rating to "bb-" from "bb" of Greenville Casualty Insurance Company (Greenville) (Greer, SC). The outlook for both ratings remains negative. The rating downgrades primarily reflects Greenville's continued weak operating performance, including significant underwriting and operating losses, while risk-adjusted capitalization remains low in conjunction with elevated underwriting leverage measures. This is mainly due to Greenville's aggressive premium growth in South Carolina and increased losses that lingered into 2014. The rapid growth also has resulted in increased operating expenses, higher loss and loss adjustment expense reserves and elevated underwriting leverage ratios. Although surplus growth was reported in 2014, Greenville's policyholders' surplus remains weak. In response to a sizable policyholders' surplus drop in 2013, the company's owner made a cash contribution of $3 million in 2014. In addition, management has taken a number of corrective actions in 2014, which include rate increases, reducing South Carolina exposure through non-renewal of unprofitable business, restricting new business growth and utilizing risk identifying tools for better risk selection, as well as tightening overall underwriting guidelines. A.M. Best anticipates operating performance will remain volatile as corrective actions begin to gain traction. These negative rating factors are partially offst by Greenville's other income and net investment income, which have been positive and have somewhat mitigated its unfavorable underwriting performance over the past five years. In addition, Greenville maintains a conservative investment philosophy as the majority of its invested assets consist of long-term bonds and cash and short-term investments. Finally, balance sheet liquidity measures are adequate and compare favorably with the private passenger non-standard automobile composite. The ratings may be downgraded if Greenville's risk-adjusted capitalization continues to decline and/or there is a continuation of adverse operating performance. Removal of the negative outlook is contingent upon improved capitalization and consistent and satisfactory operating performance. The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Key insurance criteria reports utilized:
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.
|
