AM Best

AM Best Affirms Credit Ratings of National General Group Members and Parent; Adds National Farmers Union P&C Company to Group


Lewis DeLosa, CFA
Financial Analyst
+1 908 439 2200, ext. 5529

Jennifer Marshall
+1 908 439 2200, ext. 5327

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


OLDWICK - SEPTEMBER 05, 2019 10:40 AM (EDT)
AM Best has affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb-” of National General Holdings Corp. (NGHC) (headquartered in New York, NY) [NASDAQ:NGHC], and all of the Long-Term Issue Credit Ratings (Long-Term IRs) and indicative Long-Term IRs of NGHC securities. At the same time, AM Best has affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term ICRs of “a-” of Integon National Insurance Company (Winston-Salem, NC) and its reinsured affiliates, as well as of National General Re Ltd. (Hamilton, Bermuda). The outlook of these Credit Ratings (ratings) is stable. All of the operating insurance entities are collectively referred to as National General Group. See a complete list of ratings below.

Concurrently, AM Best has removed from under review with negative implications and downgraded the FSR to A- (Excellent) from A (Excellent) and the Long-Term ICR to “a-” from “a+” of National Farmers Union Property and Casualty Company (National Farmers Union) (Winston-Salem, NC). The outlook assigned to these ratings is stable. National Farmers Union has a reinsurance agreement with Integon National Insurance Company, and the rating actions reflect the ratings of National Farmers Union’s new affiliated reinsurer.

The ratings reflect National General Group’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The assessment of balance sheet strength reflects National General Group’s risk-adjusted capitalization, the solid investment portfolio and the strength of the group’s reinsurance panel, as well as its generally favorable loss reserve development pattern. These positive factors are offset by a modest amount of adverse development in the group’s automobile loss reserves in recent years, and by the substantial level of goodwill and intangibles on NGHC’s balance sheet.

The group’s operating performance is derived from its loss ratio, which consistently outperforms those of its non-standard automobile composite peers. While the group’s statutory underwriting and operating results modestly underperformed the peer group over the past five years, the group’s profitability on a GAAP basis (which considers the benefit of the group’s fee-based revenues) is significantly better than its statutory performance metrics. In addition, the group’s returns on revenue and equity generally outperform its composite average, although 2017 and 2018 results were impacted negatively by catastrophes and severe weather.

National General Group’s business profile assessment reflects its diverse operations within the United States, which are concentrated in personal lines, primarily automobile. The saturated nature of the group’s target markets has resulted in most of its significant growth coming through acquisitions historically. NGHC has a developed ERM framework, and its risk management capabilities are generally in line with its risk profile.

Adjusted debt leverage at NGHC is in line with guidelines for its current rating, as is its interest coverage. Debt-to-tangible capital metrics are elevated relative to peers, reflecting the goodwill and intangibles associated with the enterprise’s acquisition strategy. Given the income generation of these acquisitions, the capital position is expected to increase over time, creating an improved level of tangible to total capital.

The FSR of A- (Excellent) and the Long-Term ICRs of “a-” have been affirmed, with stable outlooks for the following insurance subsidiaries of National General Holdings Corp.:

  • New South Insurance Company

  • National General Assurance Company

  • Integon National Insurance Company

  • Integon Indemnity Corporation

  • Integon General Insurance Corporation

  • MIC General Insurance Corporation

  • National General Insurance Company

  • Standard Property & Casualty Insurance Company

  • National Health Insurance Company

  • Integon Casualty Insurance Company

  • Imperial Fire and Casualty Insurance Company

  • Integon Preferred Insurance Company

  • National General Insurance Online, Inc.

  • National General Premier Insurance Company

  • National General Re Ltd.

  • Century-National Insurance Company

  • Agent Alliance Insurance Company

  • Direct Insurance Company

  • Direct General Insurance Company

  • Direct General Insurance Company of Mississippi

  • Direct National Insurance Company

  • Direct General Life Insurance Company

The following Long-Term IRs have been affirmed:

National General Holdings Corp.—

— “bbb-” on $100 million 6.75% senior unsecured notes, due 2024

— “bbb-” on $250 million 6.75% senior unsecured notes, due 2024

— “bb+” on $100 million 7.625% subordinated notes, due 2055

— “bb” on $200 million 7.5% preferred stock

— “bb” on $165 million 7.5% preferred stock

— “bb” on $55 million 7.5% preferred stock

The following indicative Long-Term IRs have been affirmed:

National General Holdings Corp.—

— “bbb-” on senior unsecured debt

— “bb+” on subordinated debt

— “bb” on preferred stock

— “bb” on junior subordinated debt

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 Understanding 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 rating agency and information provider with a unique focus on the insurance industry.

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