Press Release - APRIL 29, 2016
A.M. Best Revises Issuer Credit Rating Outlook to Positive for Members of Central Insurance Companies
FOR IMMEDIATE RELEASE
OLDWICK - APRIL 29, 2016
The positive outlook is based on Central’s improving underwriting and operating results that were reported in recent years and are expected to continue in the near term. These results were generated by significant actions taken by management over several years that were designed to improve rate adequacy and reduce risk.
Central’s positive rating attributes include excellent risk-adjusted capitalization, which is reflective of low underwriting leverage enhanced by positive cash flows and conservative reserving practices, and very favorable underwriting and operating performance relative to its peer group. The FSR also recognizes Central’s competitive advantages within its core personal and commercial segments, its high-quality customer services, strong agency relationships and geographic spread of risk.
These positive rating factors are partially offset by unfavorable underwriting results in the beginning of the five-year period, which were related to a series of severe weather-related events in excess of historical averages. Additionally, Central maintains elevated common stock leverage when compared with its peer group, however, net investment income is consistent and steady.
Further positive rating actions could occur if Central continues its earnings improvement, leading to favorable capital appreciation and risk-adjusted capitalization. Negative rating actions could occur if Central’s operating performance deteriorates markedly or if risk-adjusted capitalization were to weaken.
This press release relates to rating(s) 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.
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