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AM Best Affirms Credit Ratings of Illinois Casualty Company
[May 15, 2019]

AM Best Affirms Credit Ratings of Illinois Casualty Company

AM Best has affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "bbb+" of Illinois Casualty Company (ICC). Concurrently, AM Best has affirmed the Long-Term ICR of "bb+" of ICC Holdings, Inc. (ICCH), the publicly traded holding company that owns 100% of ICC. The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in Rock Island, IL.

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

ICC's balance sheet strength is assessed as very strong and reflects the company's strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), its favorable underwriting leverage measures compared with the commercial casualty composite averages, and its conservative reserving practices. ICC also has access to the capital markets through its publicly traded parent, ICCH. ICC reported a slight decline in surplus at year-end 2018 because of unrealized gains and an underwriting loss, but surplus has recovered because of the rebound in the equity markets in 2019.

ICC's operating performance remains adequate. The company's five-year average combined ratio compares favorably with the commercial casualty composite average, but its five-year average operating ratio, pre-tax return on revenue, and total return on equity lag the composite averages. ICC has reported positive pre-tax operating and net income in each of the past five years, but has reported underwriting losses in each of the past two years due to increased weather-related activity, with this trend continuing through first-quarter 2019.

<> Business profile is assessed as limited, primarily driven by its concentration in several Midwestern states including Illinois, Minnesota, Missouri and Iowa, and its niche in the food and beverage industry. ICC has a longstanding history of serving its target markets and is the exclusively endorsed insurer for several industry associations. ICC has expanded since it demutualized, and it currently writes business in 10 states.

ERM is appropriate for ICC's risk profile as a public, specialty insurer primarily operating in the Midwest. The company maintains a developed ERM framework that focuses on the company's most critical risks. It maintains formalized risk appetite and tolerance statements, and actively measures, monitors and manages each of its identified risks. Additionally, ICC purchases significant reinsurance mitigating the risk of tail events, as reflected by BCAR at the 99.8% VaR confidence level.

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 © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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