Oldwick, NJ -(BusinessWire)- AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Omaha National Insurance Company (ONIC) (Omaha, NE). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect ONIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The very strong balance sheet assessment reflects ONIC’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which includes a $20 million capital contribution from the company’s intermediate parent, Omaha National Group, Inc. (ONG), in April 2022, following ONG’s issuance of $20 million of senior unsecured debt. ONG also made a $35 million capital contribution to the company in December 2021, following ONG’s August 2021 Series B convertible preferred stock issuance. While ONG is capitalized primarily with convertible preferred stock and debt, which results in high financial leverage per AM Best’s guidelines, the balance sheet assessment recognizes the equity-like characteristics of ONG’s convertible preferred stock, the parent’s adequate liquidity position and ongoing capital support from several investors.
AM Best assesses the company’s operating performance as adequate based on ONIC’s historical results since inception in October 2017 and its well-defined business plan, although there is some execution risk associated with the company’s plan to start writing business produced by its affiliated managing general agent, Omaha National Underwriters, LLC (ONU), on a direct basis. ONIC assumes nearly all its premium through a quota-share agreement with an unaffiliated fronting carrier, Preferred Professional Insurance Company (PPIC). The business is produced by ONU, which manages all aspects of the policies sold through PPIC. AM Best views the company’s business profile as limited as ONIC is a monoline writer of workers’ compensation insurance with a geographic concentration in California. ONIC’s ERM capabilities benefit from rigorous claims oversight, established risk tolerance levels and strict underwriting guidelines.
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