Best’s News & Research Service - October 31, 2018 09:53 AM (EDT)
A.M. Best Affirms Credit Ratings of The Travelers Companies, Inc. and Its Main Subsidiaries
- October 31, 2018 09:53 AM (EDT)
Oldwick //BestWire// - A.M. Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa+” of its main property/casualty (P/C) subsidiaries of The Travelers Companies, Inc. (TRV) (headquartered in New York, NY) [NYSE: TRV], collectively known as Travelers Group (Travelers). In addition, A.M. Best has affirmed the FSR of A++ (Superior) and the Long-Term ICRs of “aa+” of Travelers Casualty and Surety Company of America (TCSA) (Hartford, CT) and its affiliates, Travelers Casualty and Surety Company of Europe Limited (TCSCE) (United Kingdom) and Travelers Insurance Company of Canada (TICC) (Ontario).
Concurrently, A.M. Best has affirmed the Long-Term ICRs and the senior Long-Term Issue Credit Ratings (Long-Term IR) of “a+” of TRV and its two wholly owned downstream holding companies, Travelers Property Casualty Corp. and Travelers Insurance Group Holdings Inc. (both headquartered in Hartford, CT). All outstanding securities issued by the two downstream holding companies are guaranteed by TRV. All other Long-Term IRs and Short-Term Issue Credit Ratings (Short-Term IR) guaranteed by TRV and TRV’s indicative Long-Term IRs also have been affirmed. The outlook of these Credit Ratings (ratings) is stable.
A.M. Best also has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” of The Dominion of Canada General Insurance Company (Dominion) (Toronto, Ontario, Canada). The outlook of these ratings is stable.
Additionally, A.M. Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” of First Floridian Auto and Home Insurance Company (First Floridian) (Tampa, FL). The outlook of these ratings is stable.
Furthermore, A.M. Best has upgraded the FSR to A++ (Superior) from A (Excellent) and the Long-Term ICR to “aa+” from “a+” of Travelers Insurance Company Limited (TICL) (United Kingdom) to reflect its inclusion as a member of Travelers. The outlook of these ratings is stable. (Please see link below for a detailed listing of the companies and ratings.)
The ratings of Travelers reflect the group’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its very strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).
Historically, risk-adjusted capitalization has consistently been strongly supportive of the group’s ratings. It exceeds the threshold for the strongest categorization by a wide margin, as measured by Best’s Capital Adequacy Ratio (BCAR). The assessment of the balance sheet strength of the group also reflects its stable loss reserve position, the use of a comprehensive reinsurance program and high quality reinsurance partners. The group’s very strong operating performance reflects consistently profitable results supported by typically strong underwriting results and steady investment income. The group has reported positive underwriting income in nine of the past ten years, with 2011 being the exception due to an increased amount of catastrophes. Based on 2017 direct premiums written, Travelers has the sixth-largest U.S. market share for all lines, has the second-largest market share in commercial lines and is the ninth-largest personal lines writer in the United States. Travelers maintains a broad spread of risk in that it offers a wide array of P/C coverages spread geographically in all 50 states, the District of Columbia, Canada, England and Ireland.
The ratings of TCSA and TCSCE reflect the group’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its very strong operating performance, favorable business profile and appropriate ERM.
The ratings of TICC reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, neutral business profile and appropriate ERM. The ratings also reflect the implicit support it receives from its direct parent, TCSA, as well as its ultimate parent, TRV.
The ratings of Dominion reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its marginal operating performance, neutral business profile and appropriate ERM. The ratings also reflect the implicit support it receives from its ultimate parent, TRV.
The ratings of First Floridian reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM.
Each of the groups discussed above also benefits from the financial flexibility provided by TRV, which maintains financial leverage that is in line with its current ratings, as well as additional liquidity sources given its access to capital markets and line of credit. TRV’s liquidity is bolstered by $1.39 billion of liquid funds held at Sept. 30, 2018. Substantial excess liquidity is net of sizable common stock repurchases over the past several years. A.M. Best expects that earnings and cash flows from TRV’s operating subsidiaries will allow it to support risk-adjusted capitalization, should the need arise. At the same time, surplus growth at each group occasionally has been limited over the past five years by the payment of stockholder dividends to TRV. These dividends vary based on capital needs at the various subsidiaries.
A complete listing of The Travelers Companies, Inc.’s 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 A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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