Best’s News & Research Service - June 03, 2021 04:51 PM (EDT)
AM Best Revises Outlooks to Negative for Members of NLC Insurance Companies Pool
- June 03, 2021 04:51 PM (EDT)
Oldwick //BestWire// - AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of New London County Mutual Insurance Company, Hingham Mutual Fire Insurance Company, Thames Insurance Company, Inc. and Danbury Insurance Company, which operate under an intercompany pooling agreement and are collectively referred to as NLC Insurance Companies Pool (NLC).
The Credit Ratings (ratings) of NLC reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The revised outlooks to negative from stable are based on deteriorating trends in NLC’s operating performance in recent years, largely reflective of increased frequency and severity of weather-related events and adverse development in its core lines of business. Additionally, increased expenses associated with the amortization of a new policy administration system and elevated commission costs, typical of New England carriers, contribute to NLC’s high underwriting expense ratio. Without sustained improvement, this could lead to a decline in the overall assessment of operating performance in the near to intermediate term.
NLC maintains strong overall balance sheet strength, supported by very strong risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, which is somewhat offset by limited surplus growth. Underwriting leverage ratios are maintained at levels comparable with the personal property composite. NLC’s business profile is viewed as neutral, as its geographic spread of risk is strategically concentrated in Connecticut, Massachusetts and Rhode Island, and distributed through a strong independent agency network. AM Best views NLC’s ERM framework, which includes a committee led by the CEO and consists of other senior managers that collaborate in identifying risks and developing appropriate risk mitigation procedures, as appropriate for its risk profile.
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 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.