AM Best Affirms Credit Ratings of State Automobile Mutual Insurance Company and Its Operating Subsidiaries
June 20 2019 - 11:49AM
Business Wire
AM Best has affirmed the Financial Strength Rating (FSR)
of A- (Excellent) and the Long-Term Issuer Credit Ratings
(Long-Term ICR) of “a-” of State
Automobile Mutual Insurance Company (State Auto) and its
operating subsidiaries. Concurrently, AM Best has affirmed the
Long-Term ICR of “bbb-” of State Auto’s intermediate holding
company, State Auto Financial
Corporation (STFC) [NASDAQ: STFC]. The outlook of these
Credit Ratings (ratings) is stable. All of the above companies are
headquartered in Columbus, OH. (See below for a listing of the
companies.)
The ratings reflect State Auto’s balance sheet strength, which
AM Best categorizes as strongest, as well as its marginal operating
performance, neutral business profile and appropriate enterprise
risk management (ERM).
The balance sheet assessment of strongest is derived from
risk-adjusted capitalization also being at the strongest level, a
high credit quality investment portfolio and adequate reinsurance
protection. State Auto also benefits from the financial flexibility
and access to capital afforded by its publicly traded intermediate
holding company, State Auto Financial Corporation.
Operating performance, although improving, has been marginal.
State Auto has been impacted over the past five years by technology
costs, reduced premium volume and agent commissions. In 2018, it
posted its best underwriting results over the latest five-year
period, reflecting 5.8 points of catastrophe loss and three points
of favorable prior year loss reserve development. State Auto
continues to implement risk management initiatives designed to
reduce severity, along with aggressive price monitoring efforts and
rate increases.
State Auto’s mix of business is well-diversified between
personal and commercial lines of business. There is good geographic
spread of risk, with modest concentration in the Midwest, which
exposes the group to storm loss frequency. It also maintains a
formalized ERM framework that is appropriate for its size, scope
and risk profile.
Positive rating action could occur if the group sustains a
long-term improvement in operating performance. Negative rating
action could occur if there is an occurrence of a sudden large
catastrophic loss that materially hinders risk-adjusted
capitalization or if there is any material deviation from the
group’s submitted financial projections.
The FSR of A- (Excellent) and the Long-Term ICRs of “a-” have
been affirmed for the following operating subsidiaries of
State Automobile Mutual Insurance
Company:
- State Auto Property and Casualty Insurance Company
- Milbank Insurance Company
- State Auto Insurance Company of Ohio
- Patrons Mutual Insurance Company of Connecticut
- Meridian Security Insurance Company
- State Auto Insurance Company of Wisconsin
- Rockhill Insurance Company
- Plaza Insurance Company
- American Compensation Insurance Company
- Bloomington Compensation Insurance 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 Understanding
Best’s Credit Ratings. For information on the proper media use of
Best’s Credit Ratings and AM Best press releases, please view Guide
for Media - Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.
AM Best is a global rating agency and information provider
with a unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: https://www.businesswire.com/news/home/20190620005509/en/
Jacqalene Lentz, CPA Director +1 908 439 2200,
ext. 5762 jacqalene.lentz@ambest.com
Greg Williams Senior Director +1 908 439 2200,
ext. 5815 greg.williams@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Jim Peavy Director, Public Relations +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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