AM Best Information Services

JULY 16, 2015 01:58 PM (EDT)

A.M. Best Upgrades Ratings of Triangle Insurance Company, Inc.

 Gordon McLean
Senior Financial Analyst
(908) 439-2200, ext. 5304

Jennifer Marshall
Assistant Vice President
(908) 439-2200, ext. 5327

Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK - JULY 16, 2015 01:58 PM (EDT)
A.M. Best has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and the issuer credit rating to "a-" from "bbb+" of Triangle Insurance Company, Inc. (Triangle) (Enid, OK). The outlook for both ratings has been revised to stable from positive.

The rating upgrade reflects Triangle's excellent risk-adjusted capitalization achieved through significantly improved operating profitability in recent years, management's strong niche market knowledge within the agribusiness industry and strong underwriting performance as evidenced by the company's five- and ten-year combined ratios, which outperform the commercial casualty composite by a wide margin over the long term.

Partially offsetting these positive rating factors are Triangle's exposure to the potential for natural and man-made catastrophe losses, which could result in increased volatility in operating performance; its long-term average operating results, which trail the industry composite averages given weak operating results in earlier years; and low net investment ratio, which trails the peer composite. Despite these concerns, the outlooks reflect Triangle's improved underwriting and operating performance in recent years and strong presence within the agribusiness market, which should sustain solid results and favorable levels of risk-adjusted capitalization over the near term.

The positive rating factors reflect Triangle's market knowledge and expertise in writing agribusiness coverage for members of its parent organization, Triangle Cooperative Service Company, Inc. (TCSC), which has resulted in high insured retention rates over the long term. In recent years, management has refined its underwriting guidelines through a combination of higher mandatory deductibles, an increased rate structure and the use of geocoding to enhance exposure evaluations, combined with application of loss control services intended to mitigate potential losses. The ratings also consider the explicit financial support received from TCSC, as evidenced by capital contributions in recent years. Financial leverage at the parent company is modest and remains in line for the current rating level.

While positive rating actions are unlikely in the near term, future positive rating actions could be taken on Triangle's ratings should underwriting and operating results remain strong and outperform industry composites, while maintaining a strong level of risk-adjusted capitalization.

Key factors that could trigger negative rating actions on Triangle's ratings include a downturn in operating profitability due to a weakening in underwriting performance, or an increase in catastrophe-related losses, which weakens overall 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 visit A.M. Best's Ratings & Criteria Center.

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