OLDWICK, N.J., September 15, 2022--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to "a" (Excellent) from "a-" (Excellent) of National American Insurance Company (NAICO) (Chandler, OK). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect NAICO’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The upgrade of NAICO’s ratings is based on the revision of its operating performance assessment to strong from adequate, primarily driven by consistent positive underwriting results over the past decade. In addition, this was aided by the company’s pure loss ratio, which exceeds the industry composite average by over 10 percentage points, but is partially offset by an elevated underwriting expense ratio. Furthermore, the company has reported profitable pre-tax operating return measures that are either comparable or have outperformed its industry composite averages on a five- and 10-year average basis, as well as growing net investment income generated over the past five years, reflective of steady growth in the invested asset base driven by positive operating cash flows. NAICO’s positive underwriting performance can be attributed to management’s implementation of loss control mechanisms that allow the company to remain selective in underwriting new accounts, along with management’s conservative market approach as demonstrated by its willingness to release unprofitable accounts.
NAICO’s balance sheet strength assessment of very strong reflects its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Additional factors are the company’s conservative and consistent reserving practices. prudent investment portfolio, solid liquidity measures, which are enhanced by positive underwriting and operating cash flows, as well as moderate surplus growth over the most recent five- and 10-year period, mainly attributed to operating earnings and partially offset by ongoing payment of stockholder dividends.
NAICO’s business profile assessment of neutral is based on its main focus on oil and gas (energy) that are underwritten through strong regional relationships and seasoned, experienced management team with a proven track record of executing strategy and producing profitable results. In addition, the company’s geographic footprint spans 38 states, primarily concentrated in Texas, Oklahoma and the surrounding region.
NAICO’s ERM assessment of appropriate is based on its risk management capabilities that are considered appropriate and aligned with the risk profile of the company.
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.
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