Best’s News & Research Service - June 19, 2007 04:08 PM (EDT)
A.M. Best Upgrades & Assigns Ratings to Commonwealth Contractors Group Self-Insurance Association; Revises Outlook to Stable
OLDWICK, N.J. //BestWire// - A.M. Best Co. has upgraded the financial strength rating (FSR) to A- (Excellent) from B++ (Good) and assigned an issuer credit rating (ICR) of “a-”to Commonwealth Contractors Group Self-Insurance Association (CCGSIA or the Association) (Midlothian, VA). The outlook for the FSR has been revised to stable from positive, and the outlook assigned to the ICR is stable.
The rating reflects CCGSIA’s strong capitalization, generally profitable pre-dividend underwriting results and niche market expertise. Partially offsetting these positive rating factors are the Association’s fluctuating leverage measures over a five-year period and high (after-dividend) combined ratio. Overall capitalization has improved over a two-year period on profitable underwriting results and a modest increase in net investment income. Capitalization had trended lower prior to this period largely due to dividends paid to its members. Although the Association’s increased risk retention adversely impacted its loss ratio in the 2004 fiscal year, its improved loss ratio in fiscal years 2005 and 2006 generally mirror those of prior periods. Further, loss reserves for the 2004 accident year have experienced favorable development.
CCGSIA was established with the specific objective of providing a stable, profitable workers’ compensation market for contractors and other construction-related accounts in the Commonwealth of Virginia. Through the use of sound risk management and loss control programs, as well as maintaining a low operating overhead, CCGSIA has been able to offer its members significant dividends in addition to stable premium rates. CCGSIA is very discretionary in admitting new insured members and requires firms to be financially sound and able to demonstrate effective safety programs with good loss records. Further, insureds must maintain good loss experience to both receive dividends and maintain their membership in the program.
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