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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 11, 2024 02:03 PM (EDT)
AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a” (Excellent) of Auto Club Insurance Association (ACIA) (Dearborn, MI) and its wholly owned subsidiaries and affiliates, which are collectively referred to as Auto Club Group (ACG).
Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) of Auto Club Insurance Company of Florida (ACICF) and Auto Club South Insurance Company (ACSIC). Together these companies form Auto Club Florida Group (Auto Club Florida) (both are domiciled in Tampa, FL). The outlook of these Credit Ratings (ratings) is negative. (See below for a detailed listing of ACG’s companies and ratings.)
The ratings of ACG reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The revision in the outlooks to negative from stable for ACG reflect the deterioration in the group’s operating performance in recent years following the impact of catastrophe losses, which resulted in substantial pre-tax operating losses during 2022 and 2023.
The magnitude of the downturn in results during the most recent two years has driven long-term pre-tax return on revenue measures negative for the five-year period and below that of the private passenger standard auto and homeowners composite industry when viewed over the recent five- and 10-year period.
The ratings of Auto Club Florida reflect its balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings of Auto Club Florida also consider AM Best’s assessment of the financial support afforded by its ownership group. ACICF's ultimate parents are ACIA [90%] and The Auto Club Group (Auto Club) [10%]. ACSIC is wholly owned by Auto Club.
Both ACIA and Auto Club have pledged to support ongoing growth and operations as needed. Following recent storm loss activity, capital has been called into the group at ACIA’s and Auto Club’s discretion in accordance with management’s capital risk tolerance framework. The negative outlooks reflect the impact on the group’s operating performance following catastrophe losses given its limited business profile, and to a lesser extent, adverse reserve development occurring on recent calendar years.
The outlooks have been revised to negative from stable and the FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) have been affirmed for the following members of ACG: