Best’s News & Research Service - July 02, 2021 11:12 AM (EDT)
AM Best Affirms Credit Ratings of The Allstate Corporation and Its Key Subsidiaries
- July 02, 2021 11:12 AM (EDT)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” (Superior) of the members of Allstate Insurance Group (Allstate). Additionally, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) of the members of Allstate New Jersey Insurance Group (collectively referred to as Allstate New Jersey) (headquartered in Bridgewater, NJ). AM Best also has affirmed the FSR of B+ (Good) and the Long-Term ICRs of “bbb-” (Good) of members of Castle Key Group (Castle Key). Concurrently, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa” (Superior) of American Heritage Life Insurance Company (American Heritage) (Jacksonville, FL). At the same time, AM Best has affirmed the Long-Term ICR of “a” (Excellent), and all existing Long- and Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of the ultimate parent, The Allstate Corporation (Allcorp). The outlook of these Credit Ratings (ratings) is stable. All the above named companies are headquartered in Northbrook, IL, except where specified. (See link below for a detailed listing of the companies and ratings.)
The ratings of Allstate reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM). The group’s favorable market position in the private passenger auto and homeowners markets, as well as its strong geographic reach and distribution capabilities are the underpinnings for its historically profitable operations and favorable risk-adjusted capitalization. Allstate’s trend of profitable growth is supported by its underwriting expertise and proactive pricing actions, as well as its ongoing expense efficiencies. The group’s favorable margins are attributable to enhanced pricing accuracy and risk optimization, along with its solid core underwriting capabilities, prudent capital management and sizable investment income. Allstate’s approach to innovation across its operations is a driver of its success competing in its core lines of business. Through the company’s forthcoming divestiture of its life and annuity operations and its recent acquisitions, management has demonstrated its focus on its long-term growth strategy, enhancing scale and overall diversification. However, despite Allstate’s very strong risk management practices and robust reinsurance program, the company remains inherently exposed to natural disasters occurring throughout the United States. Allcorp maintains strong financial flexibility through its access to capital markets and various other sources of liquidity. The organization’s financial leverage and coverage metrics are in line with peers and more than adequate for its current ratings.
The ratings of Allstate New Jersey reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate ERM. Additionally, the ratings recognize the financial strength, ERM and continued support of Allstate Insurance Company and Allcorp. The company’s risk-adjusted capitalization remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), driven by its consistently profitable operating performance and management’s strong capabilities. However, the group’s business concentration within one state creates material exposure to local market disruptions and the potential for localized catastrophe weather events. The ratings also reflect the consistent profitability trends in underwriting in recent years, along with AM Best’s expectation that trends in capitalization and operating performance will continue in the near to medium term.
The ratings of Castle Key reflect its balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate ERM. Castle Key’s risk-adjusted capital, as measured by BCAR, is currently adequate, reflecting growth of its business. AM Best notes that the company’s limited business profile primarily reflects its geographic concentration of property/casualty (P/C) business written in Florida. As a result, Castle Key maintains significant exposure to hurricanes, with a corresponding substantial reliance on catastrophe reinsurance. The company has posted operating profitability and surplus accumulation over the past several years despite periodic catastrophe losses brought on by weather-related events.
The ratings of American Heritage reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, favorable business profile and very strong ERM. The company’s balance sheet is anchored by its strongest risk-adjusted capital, as well as its favorable liquidity and overall surplus growth reported in recent years. American Heritage markets Allstate’s workplace benefits business in all segments of the market, including small, middle and large. While the company continues to report generally favorable growth sales and new premiums, excluding the impact of the recent COVID-19 pandemic, the benefits market is highly competitive and may continue to challenge top line growth going forward.
A complete listing of The Allstate Corporation and its P/C and life/health subsidiaries’ FSRs, Long-Term ICRs and Long- and Short-Term IRs also is available.
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.