OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Service Insurance Group (SIG) and its member, Service Lloyds Insurance Company. Concurrently, A.M. Best has affirmed the FSR of B+ (Good) and ICR of “bbb-” of Service Life & Casualty Insurance Company (Service Life & Casualty).
The ratings are based on the consolidated results of Service Lloyds Insurance Company and its run-off subsidiary, Heartland Lloyds Insurance Company. The outlook for all ratings is stable. All companies are domiciled in Austin, TX.
The ratings reflect SIG’s excellent capitalization, strong operating earnings achieved through prudent reserving practices and solid investment income, and established market presence within its niche segments. The group’s underwriting results continue to outperform the workers’ compensation composite, benefitting from management’s adherence to strict underwriting guidelines and the beneficial impact of reform legislation on the Texas workers’ compensation results.
Partially offsetting these positive factors is the concentration risk as a single state workers’ compensation writer, which potentially exposes the group to changes occurring within the economic, legislative and regulatory environment, as well as the downturn in earnings in the most recent period driven by a reduction in the level of reserve releases and lower premiums earned associated with the guaranteed asset projection line of business given weak economic conditions.
The affirmation of the ratings for Service Life & Casualty recognizes its favorable level of capitalization and continued positive earnings performance. Offsetting factors include the company’s limited business profile as it has ceased issuance of new credit insurance policies. Additionally, Service Life & Casualty has a high concentration of real estate, mortgage loans and other NAIC Schedule BA asset investments, all of which are less liquid, relative to its capital position. A.M. Best will continue to monitor the run off of its inforce block of business and the company’s invested asset portfolio.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology — Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “Rating Members of Insurance Groups.” Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
Charles Meyer, 908-439-2200, ext. 5374
Senior Financial Analyst
Michelle Baurkot, 908-439-2200, ext. 5507
Assistant Vice President ARe, ARM
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations