A.M. Best Affirms Ratings of Allstate New Jersey Insurance Group and Its Members
January 21 2011 - 3:59PM
Business Wire
A.M. Best Co. has affirmed the financial strength rating
(FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of
Allstate New Jersey Insurance Group (Allstate New Jersey)
(headquartered in Bridgewater, NJ) and its members. The outlook for
all ratings is stable. Allstate New Jersey’s ultimate parent is
The Allstate Corporation (Northbrook, IL) [NYSE: ALL]. (See
below for a detailed listing of the companies.)
The rating affirmations are based on Allstate New Jersey’s solid
risk-adjusted capitalization and generally favorable operating
performance. Allstate New Jersey's management has undertaken
various actions to enhance its overall profitability since it
became the dedicated New Jersey property and casualty carrier for
Allstate. The impact of these initiatives has been evident in
Allstate New Jersey's historically favorable operating results for
most of the past five-year period. Allstate New Jersey's operating
performance also has been positively impacted by management's local
market knowledge and ability to quickly react to changing market
conditions.
Furthermore, private passenger automobile margins have shown
improvement due to recent rate activity, new business acceptance
criteria and renewal book actions. Allstate New Jersey also has
taken steps to improve its homeowners' profitability, including
rate increases, targeted customer/property inspections and a
reduction in mono-line homeowners’ exposure. The ratings also
acknowledge the operational and financial benefits obtained as
affiliates of the members of Allstate Insurance Group
(Northbrook, IL), which is a market leader in the U.S. insurance
industry.
Allstate New Jersey's positive rating factors are somewhat
offset by its geographic concentration within one state, which
exposes its capitalization and earnings to weather-related losses,
competitive pressures and regulatory mandates. This exposure was
evident in 2010 as its homeowners’ line of business was adversely
impacted by net catastrophe losses totaling approximately $40
million, with an overall combined ratio impact of approximately six
points.
The FSR of A- (Excellent) and ICRs of “a-” have been affirmed
for Allstate New Jersey Insurance Group and its following
members:
- Allstate New Jersey Insurance
Company
- Allstate New Jersey Property and
Casualty Insurance Company
- Encompass Insurance Company of New
Jersey
- Encompass Property and Casualty
Insurance Company of New Jersey
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”; “Catastrophe Risk Management Incorporated Within the
Rating Analysis”; and “Rating Members of Insurance Groups.”
Methodologies can be found at
www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and
most authoritative insurance rating and information source. For
more information, visit www.ambest.com.
Copyright © 2011 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
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