AM Best

AM Best Affirms Credit Ratings of Protective Property & Casualty Insurance Company


Ricardo Longchallon
Senior Financial Analyst
+1 908 882 2019

Sharon Marks
+1 908 882 2092

Christopher Sharkey
Associate Director, Public Relations
+1 908 882 2310

Al Slavin
Senior Public Relations Specialist
+1 908 882 2318


OLDWICK - JUNE 28, 2023 12:14 PM (EDT)
AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Protective Property & Casualty Insurance Company (Protective P&C) (St. Louis, MO). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Protective P&C’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also reflect rating lift from its parent, Protective Life Insurance Company (Protective Life).

Protective P&C’s balance sheet strength assessment is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), good asset quality, adequate balance sheet liquidity and yearly organic surplus growth derived from earnings, which is partially offset by annual dividends to its parent. The balance sheet strength is somewhat diminished by Protective P&C’s extensive use of unrated dealer-owned reinsurance arrangements. AM Best considers the company’s operating performance to be adequate based on its consistent track record of profitability. Return metrics and underwriting ratios generally approximate its composite peer group of warranty insurers. In recent years, operating performance has benefitted from favorable market dynamics such as elevated used car valuations and pricing; however, as macroeconomic conditions improve, operating metrics are expected to return to more normal levels.

Protective P&C specializes in providing coverage for vehicle service contracts and guaranteed asset protection products for automobiles, marine craft, power sport vehicles and recreational vehicles, which are sold primarily through franchise dealers and independent agents. The neutral business profile reflects the company’s concentration of underwriting risk in the highly competitive auto warranty market, offset by its geographic diversification. The company’s ERM is appropriate for its risk profile and is integrated with that of Protective Life.

AM Best believes the recent acquisitions of Revelos in 2021 and AUL Corp in 2022 provide additional scale and diversification, as well as new distribution opportunities for Protective P&C. These businesses are expected to be fully integrated into the company’s operations over the next 12 to 18 months.

Rating enhancement has been afforded to Protective P&C due to the implied support from its higher-rated parent, its integration into the organization and its support of the organization’s asset protection strategy.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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