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A.M. Best Affirms Credit Ratings of Houston Casualty Group Members and Affiliates
[December 13, 2017]

A.M. Best Affirms Credit Ratings of Houston Casualty Group Members and Affiliates

A.M. Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "aa+" of the property/casualty members of Houston Casualty Group. The lead property/casualty members are headquartered in Houston, TX, with the exception of HCC Reinsurance Company Limited (Hamilton, Bermuda). A.M. Best also has affirmed the FSR of A++ (Superior) and the Long-Term ICR of "aa+" of HCC Life Insurance Company (HCC Life) (Indianapolis, IN). The outlook of these Credit Ratings (ratings) is stable. (See below for a list of the property/casualty companies.)

The ratings of the property/casualty members of the group reflect their consolidated balance sheet strength, which A.M. Best categorizes as strongest, as well as the very strong operating performance, favorable business profile, and very strong enterprise risk management of the consolidated operations.

The P/C companies have recorded very strong operating performance over extended time periods and across insurance cycles, led by their consistently profitable underwriting performance and complemented by investment returns that exceed industry results. The retained earnings, coupled with conservative operating leverage and favorable loss development trends, provide support to balance sheet capacity. The ratings also recognize the group's position as a specialty market leader that is exceptionally well-diversified by jurisdiction, product line and segment. The ratings also consider the operational, financial and enterprise risk management support provided by Tokio Marine & Nichido Fire Insurance Co., Ltd., which is the lead insurance operating company in the Tokio Marine Holdings, Inc. organization. These factors include day-to-day operational synergies across its U.S. based subsidiaries, reinsurance support and economic capital modeling that is superior to peer companies.

The ratings of HCC Life reflect its very strong balance sheet strength, as well as its strong operating performance, neutral business profile, very strong enterprise risk management and the enhancement it receives from its affiliation with the Houston Casualty Group.

HCC Life has contributed a considerable amount of premium and earnings to the Houston Casualty Group in recent periods while maintaining its leadership positon in the medical stop-loss insurance marketplace. In addition, HCC Life maintains a very strong balance sheet position with a more-than-adequate level of risk-adjusted capital, despite stockholder dividends paid to its parent and the recent acquisition of American International Group, Inc.'s medical stop-loss operations. While profitability ratios have declined over the past few years due to declining investment yields and a modest increase in its loss ratio, HCC Life's disciplined underwriting approach and ongoing expense management has resulted in favorable earnings over the most recent five-year period. In addition, A.M. Best believes that the aforementioned acquisition will add scale to HCC Life's operations leading to increased profitability over the medium term. Partially offsetting these positive rating factors is HCC Life's significant concentration in the medical stop-loss line of business. A.M. Best notes that the company has exited from the short-term medical insurance line of business, leaving it with just a modest amount of premiums and operating earnings outside of its medical stop-loss business.

Upward movement in the ratings may occur with advancements in line of business diversification.

Downward movement in the ratings could result from deterioration in underwriting results, adverse loss reserve development trends, a decline in capitalization or eroding premium levels.

The FSR of A++ (Superior) and the Long-Term ICRs of "aa+" have been affirmed for the following members of the Houston Casualty Group:

  • Houston Casualty Company
  • Avemco Insurance Company
  • U.S. Specialty Insurance Company
  • HCC Reinsurance Company Limited
  • HCC Specialty Insurance Company
  • American Contractors Indemnity Company
  • United States Surety Company
  • Producers Agriculture Insurance Company
  • Producers Lloyds Insurance Company

This press release relates to Credit Ratings 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 see A.M. Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating Action Press Releases.

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

Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.

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