Best’s News & Research Service - June 15, 2022 02:14 PM (EDT)
AM Best Affirms Credit Ratings of Old United Casualty Company and Old United Life Insurance Company
- June 15, 2022 02:14 PM (EDT)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Ratings of A (Excellent) and the Long-Term Issuer Credit Ratings of “a+” (Excellent) of Old United Casualty Company (OUC) and Old United Life Insurance Company (OUL). The outlook of these Credit Ratings (ratings) is stable. Both companies are headquartered in Merriam, KS.
The ratings of OUC reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
OUC’s balance sheet strength assessment is driven by its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its strong liquidity and low underwriting leverage. The company has a record of strong operating performance, categorized by profitable underwriting results and a supportive level of investment income from its investment portfolio. The company benefits from being affiliated with Berkshire Hathaway Inc. (Berkshire), its ultimate parent. Additionally, Berkshire manages OUC’s investment portfolio.
OUC specializes in providing vehicle service contracts, primarily to affiliated automobile dealerships owned by Berkshire Hathaway Automotive. OUC exercises superior loss control as a result of its affiliation and also benefits from the marketing and distribution platforms provided by these affiliates.
The ratings of OUL reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM.
OUL’s strongest level of risk-adjusted capitalization, as measured by BCAR, and high levels of liquidity are offset by the company’s adequate operating performance, which includes modest but positive operating earnings. OUL also benefits from its affiliation with Berkshire and the same affiliated automotive dealerships as OUC.
AM Best views OUC’s and OUL’s business profiles as limited. Auto warranty represents over 90% of OUC’s business, with substantial geographic concentration in a few states. OUL’s credit life and credit accident and health products also are focused in the automotive market and geographically concentrated with more than 90% of its business in Michigan, Texas and Arizona. AM Best considers ERM appropriate relative to the companies’ risk profiles.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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.