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FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 17, 2019 02:39 PM (EST)
AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” from “bbb+” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Amalgamated Casualty Insurance Company (ACIC) (headquartered in Chevy Chase, MD). The outlook of these Credit Ratings (ratings) has been revised to stable from negative.
The ratings reflect ACIC’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
The downgrade of the Long-Term ICR reflects a revision in AM Best’s assessment of the company’s operating performance to marginal from adequate. The rating action is in response to adverse trends in ACIC’s underwriting performance following a period of significant growth in noncore classes of business, including nonemergency medical transport (NEMT) and in U.S. states with mandatory higher limits. The overall growth initiative has not been profitable, with underwriting losses reported in each of the most-recent four years and through the first nine months of 2019. The company has taken steps to improve results through nonrenewals, rate increases and reducing fixed expenses by approximately 30%. In addition, unprofitable classes of business have been placed into run-off with the company returning its focus to its core taxi and sedan book of business, which was historically profitable. Nevertheless, overall operating performance in recent years remains below management’s and AM Best’s expectations.
The stable outlooks reflect AM Best’s evaluation that the company continues to maintain a very strong balance sheet and the expectation that improvement in underwriting results will be forthcoming in the intermediate term. The limited business profile is due to ACIC’s concentration of risk in commercial automobile lines for taxis and sedans.
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 Guide to 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 credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.