A.M. Best announced last week that it upgraded the financial strength ratings of the property/casualty members of Houston Casualty Group and of HCC Life Insurance Company to the rating agency’s higher level—A++ (superior).
Among other things, the ratings consider the strategic role these companies serve for the direct parent TMNF, and ultimate parent, Tokio Marine Holdings, Inc., the Oldwick, N.J.-based rating agency said in a statement
Tokio Marine agreed to buy the specialty insurer for $7.5 billion in June last year, closing the deal in October 2015.
Supporting the ratings actions, Best said ratings of the P/C group members consider strong levels of risk-adjusted capitalization and long-term consistently favorable underwriting and investment earnings.
In the view of Best’s analysts, the group also has strong earnings prospects, given its presence in the specialty property/casualty market, moderate risk profile and conservative investment strategy.
The ratings are supported by proven underwriting expertise and loss reserve strategy, which help support balance sheet strength. “Houston Casualty Group continues to produce outstanding gross and net underwriting results despite competitive challenges in the specialty admitted/surplus lines market and adverse results recorded in a portion of its professional liability line,” the rating agency statement said.
Summarizing events that could prompt future upgrades or downgrades, Best said upward movement in could occur with advancements in line of business diversification, ongoing growth in policyholders’ surplus, continuation of underwriting and overall profitability or advancement of the relationship between these companies and the ultimate parent. Downward movement in the ratings could result from adverse trends in claim frequency or severity that materially impair underwriting results, deterioration in loss reserve development trends, a decline in capitalization or eroding premium levels. Rating actions, either upward or downward, could be taken if there is any change in the ratings of the group’s ultimate parent or in A.M. Best’s view of the strategic importance of the group to the ultimate parent.
Source: A.M. Best