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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - SEPTEMBER 17, 2012 12:00 AM (EDT)
A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating of B++ (Good) and issuer credit rating of “bbb” of Triangle Insurance Company, Inc. (TIC) (Enid, OK).
The revised outlook reflects TIC’s improved operating performance and risk-adjusted capital position in 2010 through the present. The ratings also reflect TIC’s supportive capitalization generated by capital contributions and, in recent years, operating profits as well as the company’s strong niche market knowledge within the agribusiness industry.
Partially offsetting these positive rating factors is TIC’s exposure to natural and man-made catastrophe losses, which leads to the potential for increased volatility in operating performance, the earnings drag associated with adverse loss reserve development and competitive market conditions.
Additionally, the ratings consider the financial support TIC receives from Triangle Cooperative Service Company (TCSC), as evidenced by capital contributions as needed to support the operations of TIC. Financial leverage of 15.3% of debt-to-total capital at TCSC has declined in recent years and is acceptable for TIC’s current ratings.
A significant improvement in TIC’s operating performance must be exhibited and sustained over a period of time as well as it demonstrating the ability to organically generate surplus growth through profitable earnings before positive movement in the ratings would be considered.
Alternatively, further weakening in the company’s operating performance or an increase in catastrophe-related losses beyond A.M. Best’s expectations, which weakens its overall capitalization will likely result in negative rating actions.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Understanding BCAR for Property/Casualty Insurers”; “Risk Management and the Rating Process for Insurance Companies”; “Catastrophe Analysis in A.M. Best’s Ratings”; and “Insurance Holding Company and Debt Ratings.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.