Best’s News & Research Service - June 18, 2013 04:29 PM (EDT)
UPDATE: A.M. Best Downgrades Ratings of IFA Insurance Company
OLDWICK, N.J. //BestWire// - (This updates information in the second paragraph.)
A.M. Best Co. has downgraded the financial strength rating to B- (Fair) from B+ (Good) and issuer credit rating to “bb-” from “bbb-” of IFA Insurance Company (IFA) (Clark, NJ). The outlook for both ratings is negative.
The rating downgrades reflect IFA’s net losses from Superstorm Sandy in the fourth quarter of 2012 and the first quarter of 2013, as well as changes in the New Jersey tax laws and the treatment of income taxes and deferred tax assets, which were necessitated by the deterioration in the company’s capital position. The most recent financial results follow IFA’s unprofitable operating performance in recent years, which is a result of the company’s adverse trends in bodily injury and personal injury protection loss experience in the New Jersey personal automobile market. Although the company continues to refine its underwriting criteria and implement rate increases in response to market trends and conditions, uncertainty exists regarding its ability to improve operating performance, given the competitive operating environment of the New Jersey automobile market and the continued challenging interest rate environment.
Further downward rating actions may occur if IFA’s underwriting results continue to deteriorate, in conjunction with a corresponding loss of its risk-adjusted capitalization.
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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.