APRIL 27, 2012 12:00 AM (EDT)
A.M. Best Upgrades Ratings of Century-National Insurance Company
Michael T. Venezia
Senior Financial Analyst
(908) 439-2200, ext. 5034
Assistant Vice President
(908) 439-2200, ext. 5665
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 27, 2012 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and issuer credit rating to a from a- of Century-National Insurance Company (CNIC) (North Hollywood, CA). The outlook for both ratings has been revised to stable from positive.
The rating actions reflect CNICs strong capitalization, sound operating performance and extensive knowledge of the local marketplace. Capitalization benefits from CNICs reserving practices that have resulted in consistently redundant calendar and accident year loss reserve development. Furthermore, the companys underwriting leverage measures have improved in recent years due to solid surplus growth combined with the reduction in premiums written. CNICs favorable operating returns have been driven primarily by underwriting profits coupled with a robust stream of net investment income.
Partially offsetting these positive rating factors is CNICs concentration of risk in California that makes it susceptible to competitive, regulatory and legislative changes and to potential losses from severe catastrophic events, primarily earthquakes, which are somewhat mitigated by a comprehensive reinsurance program. Additionally, the companys sizable common stock portfolio subjects its surplus to stock market volatility, which was evident in an earlier period. The stable outlook recognizes A.M. Bests expectation that CNICs operating performance and risk-adjusted capitalization will continue to be strong over the near term.
CNICs ratings and/or outlook could be negatively impacted by unexpectedly large losses that would materially affect capitalization on a risk-adjusted basis.
The methodology used in determining these ratings is Bests Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bests rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: Risk Management and the Rating Process for Insurance Companies; Understanding BCAR for Property/Casualty Insurers; and Catastrophe Analysis in A.M. Best Ratings. Bests Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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