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Best’s News & Research Service - May 03, 2023 09:52 AM (EDT)

AM Best Revises Issuer Credit Rating Outlooks to Negative for Tuscarora Wayne Insurance Company and Affiliate

  • May 03, 2023 09:52 AM (EDT)
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Oldwick //BestWire// - AM Best has revised the outlooks to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a+” (Excellent) of Tuscarora Wayne Insurance Company and its affiliate, Keystone National Insurance Company. The outlook of the FSR is stable. Both companies are domiciled in Wyalusing, PA and collectively referred to as Tuscarora Wayne Companies.

In addition, AM Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Lebanon Valley Insurance Company (Lebanon Valley) (Wyalusing, PA). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Tuscarora Wayne Companies’ balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The revised Long-Term ICR outlook to negative for Tuscarora Wayne Companies reflects continued deviation from historically strong operating performance in more recent calendar year results. Results over the past three years have aligned more closely to its adequately assessed composite peers with older years aligning more closely to strongly assessed composite peers. The negative Long-Term ICR outlook reflects pressure on the operating performance assessment as it relates to the relative performance of Tuscarora Wayne Companies within its composite group, more recently impacted by greater loss severity, combined with weather and fire losses. The very strong overall balance sheet strength is marked by the strongest level of risk-adjusted capitalization, as measured Best’s Capital Adequacy Ratio (BCAR). Additional factors include the companies’ solid liquidity, generally consistent and favorable loss reserve development, partially offset by dividends to their parent, which has somewhat limited surplus growth and underwriting leverage metrics that remain modestly above the composite averages. The neutral business profile continues to focus on underserved commercial business with modest geographic diversification. The ERM program is considered appropriate for the group’s risk profile, including prudent reinsurance protection and comprehensive risk scorecards.

The ratings of Lebanon Valley reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile, appropriate ERM, as well as rating enhancement via the explicit and implicit support provided as an affiliate of Tuscarora Wayne Companies.

Lebanon Valley’s strong level of overall balance sheet strength continues to be supported by the strongest level of risk-adjusted capitalization, as measured by BCAR, generally favorable loss reserve development, consistent surplus growth and comparatively low underwriting leverage metrics aside from its net premium written leverage, which is more in line with the composite average. Furthermore, the adequate operating performance reflects a modest amount of volatility in recent years, while five-year average metrics compare favorably with the composite. The limited business profile is marked by the company’s geographic concentration in Pennsylvania with a focus on commercial business. The company is included in an organization-wide ERM program that includes Tuscarora Wayne Companies and is considered appropriate for the company’s risk profile.

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.

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