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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JULY 16, 2009 12:00 AM (EDT)
A.M. Best Co. has downgraded the issuer credit rating to "bbb" from "bbb+" and affirmed the financial strength rating of B++ (Good) of Triangle Insurance Company, Inc. (Triangle) (Enid, OK). The outlook for both ratings has been revised to negative from stable.
These rating actions reflect the volatility in Triangle's earnings results caused by storm losses in three of the last five years, which in turn have required surplus contributions from its parent, Triangle Cooperative Service Company (Triangle Cooperative) (Enid, OK). While these surplus contributions were funded by increased bank debt at Triangle Cooperative, financial leverage at the parent is a reasonable 28% (debt-to-total tangible capital), with strong cash flow coverage ratios but thin earnings coverage ratios.
Offsetting these negative rating factors are Triangle's adequate capitalization, long-term acceptable underwriting and operating performance and strong relationship with insureds. These positive rating factors are derived from Triangle's local market presence and expertise in writing coverages for members of Triangle Cooperative, which results in high insured retention rates.
The negative outlook reflects A.M. Best's concern that surplus remains vulnerable to natural and man made catastrophe losses, despite being somewhat mitigated by a new 25% quota share treaty in Triangle's retention layer.
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.