Oldwick, NJ -(BusinessWire)- A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit ratings (ICR) of “a-” of Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Assurance Company and Employers Preferred Insurance Company, collectively referred to as the Employers Insurance Group (Employers). In addition, A.M. Best has affirmed the ICR of “bbb-” of Employers Holdings, Inc. (EHI) [NYSE:EIG], the publicly traded ultimate parent of Employers. The outlook for all ratings remains negative. All companies are headquartered in Reno, NV.
The ratings reflect the group’s solid risk-adjusted capitalization, recently improved operating earnings, and the financial flexibility afforded by EHI. Improved underwriting margins in recent years have been driven by general rate improvement in the workers’ compensation market and underwriting actions applied to underperforming business.
Partially offsetting these positive rating factors are the variability in pre-tax operating results and continued adverse reserve development occurring on the most recent accident years. In addition, Employers maintains business concentration risk operating as a mono-line workers’ compensation insurer, with a relatively high concentration of premium volume in a select number of states. While this concentration exposes results to the potential impact of regulatory, legislative and economic changes, this concern is partially mitigated by management’s market expertise.
Negative rating actions could result from a reduction in risk-adjusted capitalization to a level that is not supportive of the ratings, premium growth in excess of projections, a deterioration in the operating performance or additional deterioration in the group’s reserving position. Alternatively, positive rating actions could occur with stabilization of the loss reserve position for the most recent accident years, continued improvement in underwriting and operating results to a sustainable level that outperforms similarly rated peers, and maintaining additional improvement in the group’s risk-adjusted capital position given moderation in the growth of net premiums written.
Source: BusinessWire