CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 23, 2016 03:14 PM (EST)
A.M. Best has revised the outlook to positive from stable for the issuer credit rating (ICR) of Illinois Casualty Company (Illinois Casualty) (Rock Island, IL), while affirming the financial strength rating (FSR) of B++ (Good) and the ICR of “bbb”. The outlook on the FSR remains stable.
The affirmation and revised outlook reflect the company’s improved operating results and risk-adjusted capitalization over the past five years. Current management continues to improve rates and grow premium while maintaining a slow growing policy count. The company’s combined ratios are trending in a positive direction with results under 100% for 2014 and 2015. These positive results are anticipated to continue based on the reliability of current management’s historical projections. Previous years of combined ratios over 100% were due to elevated expenses as the company has had favorable pure loss ratios that outperform the commercial casualty composite. Expense initiatives have already gained traction and are expected to further reduce the company’s elevated expense ratio going forward. Also, Illinois Casualty has exhibited strength in loss reserves with redundancies on both an accident and calendar year basis. Lastly, Illinois Casualty maintains strong underwriting expertise and a long-standing position within the food and beverage industry in the Midwest.
These factors are somewhat offset by the company’s overall weak operating return measures. Although underwriting results are improving, the past five years have fluctuated. The company will be challenged to improve its underwriting and investment expense ratios to better reflect the peer composites given its modest size, which compresses overall margins.
Positive rating action is contingent on strengthening risk-adjusted capitalization combined with a positive trend in operating results. The ratings could be negatively impacted by a return to poor operating performance or a marked drop in risk-adjusted capitalization.
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.