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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JULY 16, 2010 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating to B++ (Good) from B+ (Good) and issuer credit rating to "bbb" from "bbb-" of National American Insurance Company (NAICO). Concurrently, A.M. Best has upgraded the ICR to "bb" from "bb-" and debt rating to "bb" from "bb-" on $24 million 8.75% senior unsecured debentures due 2014 (of which $7 million remains) of NAICO's parent, Chandler (USA) Inc. (Chandler) (both domiciled in Chandler, OK). The outlook for all ratings is stable.
The ratings reflect NAICO's strong risk-adjusted capitalization, improved operating performance and long-standing regional market presence. The improvement is due in part to management's corrective actions over the years, including significantly increasing rates, reducing exposures, improving risk selection and tightening policy terms and conditions.
These rating factors are somewhat offset by the historical adverse loss reserve development reported on certain accident years prior to 2002, as well as NAICO's considerable dependence on reinsurance, despite increased retention levels in recent years. Nevertheless, the outlook is supported by the company's significantly improved risk-adjusted capital position, diminished loss reserve development reported in recent years and management's projections for persistent operating profitability and strong risk-adjusted capitalization over the near term.
The ratings also consider the financial leverage and interest coverage of the organization on an enterprise basis. Consolidated financial leverage of debt plus preferred stock to total capital remains acceptable given the current rating levels, with interest coverage ratios also within acceptable parameters.
NAICO offers various property/casualty insurance products through its two main marketing programs: political subdivisions, which insures school districts in Oklahoma, and standard lines.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.