Raymond Thomson, ARM Senior Financial Analyst (908) 439-2200, ext. 5621 raymond.thomson@ambest.com Jeffrey Mango, CPA Vice President (908) 439-2200, ext. 5204 jeffrey.mango@ambest.com | Rachelle Morrow Senior Manager, Public Relations (908) 439-2200, ext. 5378 rachelle.morrow@ambest.com Jim Peavy Assistant Vice President, Public Relations (908) 439-2200, ext. 5644 james.peavy@ambest.com |
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 26, 2012 12:00 AM (EDT)
A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of B+ (Good) and issuer credit rating of “bbb-” of MGA Insurance Company, Inc. (MGA) (Dallas, TX).
These rating actions recognize MGA’s favorable risk-adjusted capitalization and profitable operating results during a period of challenging economic conditions, particularly within its niche of personal non-standard automobile. The company has adjusted rates and advanced its pricing sophistication, which has combined with recent favorable loss trends to lead to continuing improvement in underwriting performance. In addition, MGA has achieved organic surplus growth in each of the past three years, inclusive of dividend payments to its parent company, GAINSCO, INC.
These positive rating factors are somewhat offset by MGA’s historically variable underwriting performance. While more aggressive premium growth in past years has been tempered, some recent volatility in premium production has resulted in slightly elevated underwriting leverage measures. Moreover, the company maintains a somewhat modest business profile with concentration in states with generally difficult operating environments for the non-standard automobile segment.
The positive outlook reflects A.M. Best’s expectation that the ratings may be upgraded in the near term if MGA can continue its trends of positive operating performance and solid risk-adjusted capitalization. However, if the company’s underwriting performance should decline, the positive outlook could be reconsidered.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s 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” and “Understanding BCAR for Property/Casualty Insurers.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.