Press Release - MAY 07, 2019

AM Best Affirms Credit Ratings of Old United Casualty Company and Old United Life Insurance Company


CONTACTS:
 Filippo Novella
Financial Analyst – P/C
+1 908 439 2200, ext. 5486
filippo.novella@ambest.com

Richard Francis
Senior Financial Analyst – L/H
+1 908 439 2200, ext. 5152
richard.francis@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - MAY 07, 2019
AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of Old United Casualty Company (OUC) and Old United Life Insurance Company (OUL). The outlook of these Credit Ratings (ratings) is stable. Both companies are headquartered in Shawnee Mission, KS.

The ratings of OUC reflect its balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

OUC’s balance sheet strength assessment is underpinned by its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its strong liquidity and conservative investment portfolio. The company has a record of strong operating performance, underpinned by consistently profitable underwriting results and a healthy level of investment income from its investment portfolio. Additionally, the company benefits from being affiliated with Berkshire Hathaway, Inc. (Berkshire), its ultimate parent. OUC specializes in providing vehicle service contracts, primarily to affiliated automobile dealerships owned by Berkshire Hathaway Automotive. OUC benefits from the marketing and distribution platforms provided by these affiliated dealerships and manages to exercise superior loss control.

The ratings of OUL reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate ERM.

OUL’s strongest level of risk-adjusted capitalization, as measured by BCAR, and high levels of liquidity are offset by the company’s marginal operating performance, which includes modest but positive operating earnings and continuing sales declines as consumer preferences have shifted away from credit life and credit accident and health products to vehicle service contracts, such as those sold by OUC. OUL also benefits from its affiliation with Berkshire and the same affiliated automotive dealerships as OUC.

AM Best views OUC and OUL’s business profiles as limited. Auto warranty represents over 90% of OUC’s business, with substantial geographic concentration in a few states. OUL’s credit life and credit accident and health products also are focused in the automotive market and geographically concentrated with more than 90% of its business in Michigan, Texas and Arizona. ERM is considered appropriate relative to the risk profile of both companies.

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.


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