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AM Best Affirms Credit Ratings of Houston Casualty Group Members and Affiliates
[December 21, 2018]

AM Best Affirms Credit Ratings of Houston Casualty Group Members and Affiliates

AM 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 (P/C) members of Houston Casualty Group. The lead P/C members are headquartered in Houston, TX, with the exception of HCC Reinsurance Company Limited (Hamilton, Bermuda). AM 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 P/C companies.)

The ratings of the P/C members of the group reflect their consolidated balance sheet strength, which AM Best categorizes as strongest, as well as their very strong operating performance, favorable business profile and very strong enterprise risk management (ERM) of the consolidated operations.

The P/C companies continue to record very strong operating performance across extended time periods and multiple underwriting cycles. This captures consistent performance in underwriting results and investment returns that continues to exceed industry levels by a significant margin. Proactive management of capital levels includes retaining earnings to provide balance sheet capacity for the risk profile and appetite. The ratings recognize the group's position as a considerably well-diversified specialty market leader that encompasses product, jurisdiction and distribution. The ratings also consider the operational, financial and ERM 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 balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and very strong ERM. The ratings also reflect the rating enhancement it receives from its affiliation with the Houston Casualty Group.

HCC Life continues to maintain the strongest level of risk-adjusted capitalzation, as measured by Best's Capital Adequacy Ratio (BCAR), despite a decline in capital and surplus due to the recent acquisition of American International Group, Inc.'s medical stop-loss (MSL) 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, the aforementioned acquisition adds scale to HCC Life's operations and has resulted in increased profitability through the first three quarters of 2018, as the acquisition is accretive to earnings. HCC Life has contributed an increasing portion of Houston Casualty Group's overall premium and earnings in recent periods and has strengthened its leadership position in the MSL insurance marketplace with the aforementioned acquisition. Partially offsetting these positive rating factors is HCC Life's significant concentration in the MSL line of business. AM Best notes that the company has recently exited from the short-term medical insurance line of business leaving it with only a modest amount of premiums and operating earnings outside of its MSL business

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 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 Understanding Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit for more information.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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