AUGUST 11, 2022 03:55 PM (EDT)
AM Best Affirms Credit Ratings of The Allstate Corporation and Its Key Subsidiaries
|Kate Steffanelli |
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FOR IMMEDIATE RELEASE
OLDWICK - AUGUST 11, 2022 03:55 PM (EDT)
AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” (Superior) of the members of Allstate Insurance Group (Allstate). Additionally, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) of the members of Allstate New Jersey Insurance Group (collectively referred to as Allstate New Jersey) (headquartered in Bridgewater, NJ) and First Colonial Insurance Company (FCIC) (headquartered in Jacksonville, FL). At the same time, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of ASMI Auto Group’s members. AM Best also has affirmed the FSR of B+ (Good) and the Long-Term ICRs of “bbb-” (Good) of the members of Castle Key Group (Castle Key).
Concurrently, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa” (Superior) of American Heritage Life Insurance Company (American Heritage) (Jacksonville, FL), Direct General Life Insurance Company (Orangeburg, SC) and National Health Insurance Company (Dallas, TX). At the same time, AM Best has affirmed the Long-Term ICR of “a” (Excellent), and all existing Long-and Short Term Issue Credit Ratings, (Long-Term IR; Short-Term IR) of the ultimate parent, The Allstate Corporation (Allcorp). AM Best also has affirmed the Long-Term ICR of “a” (Excellent) and Long-Term IR’s of National General Holdings Corp. (Delaware), an intermediate holding company of Allcorp. The outlook of these Credit Ratings (ratings) is stable.
All the above named companies are headquartered in Northbrook, IL, except where specified. (See link below for a detailed listing of the companies and ratings.)
The ratings of Allstate reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and very strong enterprise risk management (ERM).
The Allstate group’s favorable market position in the private passenger auto and homeowners markets, as well as its strong geographic reach and distribution capabilities are the underpinnings for its historically profitable operations and favorable risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Allstate’s trend of profitable growth is supported by its underwriting expertise and proactive pricing actions, as well as its ongoing expense efficiencies. Allstate’s approach to innovation across its operations is a driver of its success competing in its core lines of business. The divestiture of its life and annuity operations has enhanced capitalization and management has demonstrated its focus on its long-term growth strategy, enhancing scale and overall diversification. However, despite Allstate’s very strong risk management practices and robust reinsurance program, the company remains inherently exposed to natural disasters occurring throughout the United States. Additionally, the auto industry has experienced significantly increased claim repair costs over the past 12 months, which drove the organization to materially increase prior year reserves, impacting second quarter results in 2022. AM Best notes that Allcorp maintains strong financial flexibility through its access to capital markets and various other sources of liquidity. The organization’s financial leverage and coverage metrics are in line with peers and more than adequate for its current ratings.
The ratings of Allstate New Jersey reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate ERM. Additionally, the ratings recognize the financial strength, ERM and continued support of Allstate Insurance Company and Allcorp. The company’s risk-adjusted capitalization remains at the strongest level, as measured by BCAR, primarily due to its profitable operating performance and management’s strong capabilities. However, the group’s business concentration within one state creates material exposure to local market disruptions and the potential for localized weather catastrophe events. The ratings also reflect AM Best’s expectation that trends in capitalization and operating performance will continue in the near to medium term.
The ratings of FCIC reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate ERM. FCIC’s ratings also benefit from the explicit and implicit support provided by Allcorp, its ultimate parent. As a subsidiary of Allcorp, FCIC benefits from its expansive market presence and brand-name recognition. FCIC’s very strong balance sheet is anchored by its strongest level of risk-adjusted capitalization, as measured by BCAR, and its effectively managed investment portfolio. The company’s marginal operating performance reflects historical volatility and improving trends in underwriting results tied to certain lines of business. AM Best notes that the company continues to supplement its core product income with a suite of ancillary product offerings, and from fee income from affiliate companies within the Allstate Dealer Services group.
The ratings of Castle Key reflect its balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate ERM. Castle Key’s risk-adjusted capital, as measured by BCAR, is currently strong, reflecting growth of its business. AM Best notes that the company’s limited business profile primarily reflects its geographic concentration of property/casualty (P/C) business written in Florida. As a result, Castle Key maintains significant exposure to hurricanes, with a corresponding substantial reliance on catastrophe reinsurance. The company has posted operating profitability and surplus accumulation over the past several years despite periodic catastrophe losses brought on by weather-related events.
The ratings of American Heritage reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and very strong ERM. The company’s balance sheet is anchored by its very strong level of risk-adjusted capitalization, as well as its favorable liquidity and overall surplus growth reported in recent years. American Heritage markets Allstate’s workplace benefits business in all segments of the market, including small, middle and large. While the company continues to report generally favorable growth sales and new premiums, the benefits market remains highly competitive with potential to challenge top line growth going forward.
The ratings reflect ASMI Auto Group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, very limited business profile and appropriate enterprise risk management. The ratings also reflect the risk management and service agreement support of its ultimate parent, Allcorp. ASMI Auto Group’s risk-adjusted capitalization remains at the very strong level, as measured by BCAR, and the group’s conservative investment allocation and adequate liquidity metrics further support the overall balance sheet assessment. The very limited business profile of ASMI Auto Group is reflective of its run-off nature, as it was created to house certain inactive Michigan auto policies with active injury claims that represent the majority of Allcorp’s Michigan Catastrophic Claims Association recoverables. In line with expectations, operating performance continues to be primarily driven by net investment income and will be consistently and modestly profitable.
The ratings of Direct General Life Insurance Company and National Health Insurance Company reflect their balance sheet strength, which AM Best assesses as strongest, as well as their adequate operating performance, neutral business profile and very strong ERM.
A complete listing of The Allstate Corporation and its P/C and life/health subsidiaries’ FSRs, Long-Term ICRs and Long- and Short-Term IRs is available.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.