CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK - APRIL 14, 2023 10:12 AM (EDT)
AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR), and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term ICR of “aa” (Superior) for the members of Auto Club Enterprises Insurance Group (collectively referred to as ACE) (headquartered in Costa Mesa, CA). The outlook of the FSR is stable. See below for a detailed list of companies.
The Credit Ratings (ratings) reflect ACE’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile, and appropriate enterprise risk management.
The negative Long-Term ICR outlook reflects the recent deterioration in the group’s operating performance, including elevated combined ratios both pre- and post-dividend, resulting from increased claim frequency and severity caused largely by inflationary trends. Further, the group has a large concentration in California, where the regulatory environment continues to be challenging, particularly with respect to raising policy premium rates.
AM Best notes that ACE has implemented detailed strategic initiatives to restore underwriting profitability that includes both rate and non-rate actions. The group was recently granted a 6.9% increase for California automobile policies and plans to submit further rate increase requests as needed. AM Best expects the group’s earnings to improve year-over-year but understands that it may take additional time to return to profitability.
The FSR of A+ (Superior) and the Long-Term ICR of “aa” (Superior) have been affirmed, with the outlook of the Long-Term ICRs revised to negative from stable, while the outlook of the FSR is stable, for the following members of Auto Club Enterprises Insurance Group:
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.