CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - NOVEMBER 01, 2010 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and issuer credit rating to "a-" from "bbb" of Chrysler Insurance Company (CIC) (Farmington Hills, MI). These ratings have been removed from under review with negative implications and assigned a stable outlook.
CIC, formerly DaimlerChrysler Insurance Company, is a wholly owned subsidiary of Chrysler Financial Services Americas LLC (CFS), formerly DaimlerChrysler Financial Services Americas.
The rating actions are based on CFS' repayment of its term debt and continuing explicit support provided to CIC with its new business model as CFS transitions to a non captive finance company. The ratings also reflect CIC's current and projected excellent level of risk-adjusted capitalization and its effective management of exposures. The ratings further acknowledge CIC's favorable, although somewhat variable, operating results that are derived from its underwriting expertise, loss prevention measures and effective low-cost distribution systems.
These rating strengths are partially offset by CIC's limited product offering, which is subject to volatility in underwriting results due to weather-related events. While underwriting results may continue to be impacted due to storm-related losses, management has increased its catastrophe loss limits, which it believes will protect overall surplus levels. Although surplus has fluctuated over a five-year period (largely owing to stockholder dividends), management is committed to maintaining excellent capitalization levels.
The ratings recognize management's strong underwriting abilities in the dealer inventory insurance and other transportation related business lines and the company's exceptional enterprise risk management practices. Historically, CIC has been able to assess and analyze risk holistically, identifying areas of concern (e.g., underwriting, pricing, reserving) and proactively develop strategies, internal processes and procedures to mitigate these risks, while remaining profitable and complying with regulations.
In the past, CIC has benefited from CFS' well-diversified auto dealer network that provided it with a highly efficient and effective distribution system, strong operating synergies, market opportunities and strategic value. Going forward, CIC will replace this advantageous distribution channel as CFS is no longer the captive finance provider of Chrysler Group LLC and its dealers. As such, A.M. Best will closely monitor CIC's quarterly performance and these issues, as CFS' new business plan represents an enormous shift in strategy on an ongoing basis.
A.M. Best remains the leading rating agency of captive insurers rating a wide variety of more than 200 captives in the United States and throughout the world.
For current Best's Credit Ratings and independent data on the captive and alternative insurance market, please visit Best's Captive Center.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; "A.M. Best's Rating Methodology for Captive Insurance Companies"; "Rating New Company Formations"; and "Natural Catastrophe Stress Test Methodology." Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.