A.M. Best has affirmed the Financial Strength Rating
(FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings
(Long-Term ICR) of “aa+” of the property/casualty subsidiaries of
The Travelers Companies, Inc. (TRV) (headquartered in New
York, NY) [NYSE:TRV], collectively known as Travelers Group
(Travelers). In addition, A.M. Best has also affirmed the FSR of
A++ (Superior) and the Long-Term ICR of “aa+” of Travelers
Casualty and Surety Company of America (TCSA) (Hartford, CT),
and TCSA’s affiliates, Travelers Casualty and Surety Company of
Europe Limited (TCSCE) (United Kingdom) and Travelers
Insurance Company of Canada (TICC) (Ontario).
Concurrently, A.M. Best has affirmed the Long-Term ICR and
senior Long-Term Issue Credit Ratings (Long-Term IR) of “a+” of TRV
and its two wholly owned downstream holding companies, Travelers
Property Casualty Corp. and Travelers Insurance Group
Holdings Inc. (both headquartered in Hartford, CT). All
outstanding securities issued by the two downstream holding
companies are guaranteed by TRV. All other Long-Term IR and
Short-Term Issue Credit Rating (Short-Term IR) guaranteed by TRV
and TRV’s indicative Long-Term IRs have also been affirmed. The
outlook of each of the above Credit Ratings (ratings) is
stable.
A.M. Best also has affirmed the FSR of A (Excellent) and the
Long-Term ICR of “a” of The Dominion of Canada General Insurance
Company (Dominion) (Toronto Ontario, Canada). The outlook of
each of these ratings is stable.
A.M. Best also has affirmed the FSR of A- (Excellent) and the
Long-Term ICR of “a-” of First Floridian Auto and Home Insurance
Company (First Floridian) (Tampa, FL). The outlook of these
ratings is stable. (Please see link below for a detailed listing of
the companies and ratings.)
Additionally, A.M. Best also has affirmed the FSR of A
(Excellent) and the Long-Term ICR of “a+” of The Premier
Insurance Company of Massachusetts (Premier) (Hartford, CT)
with a stable outlook. A.M. Best has concurrently withdrawn its
ratings for Premier, as the company has requested to no longer
participate in A.M. Best’s interactive rating process.
The rating affirmations of Travelers reflect the group’s solid
risk-adjusted capitalization, trend of favorable operating and
underwriting results, excellent market profile in commercial and
personal lines (largely distributed through independent agents) and
effective management team. The ratings also acknowledge Travelers’
proactive and comprehensive risk management, underwriting and
financial discipline, relatively conservative investment portfolio,
geographic and product diversification, and enhanced technology and
internal information systems, which have improved its underwriting
effectiveness and ability to service agents and customers in both
commercial and personal lines. In addition, Travelers’ superior
product breadth, industry leading data and analytics and leading
position within its distribution network have enabled it to report
a trend of strong earnings that have outperformed the majority of
its peers over time.
Travelers’ ratings also consider the financial flexibility and
liquidity provided by TRV. TRV held $2.5 billion of liquid funds at
June 30, 2017, $490 million of which was used in the August 2017
acquisition of Simply Business, with a further $450 million
earmarked to fund a December 2017 debt maturity. Substantial
remaining excess liquidity is net of sizable common stock
repurchases over the past several years. TRV’s debt-to-capital
ratio at June 30, 2017 remained modest at 22.5%. Adjusting for
tangible capital, the debt-to-tangible capital ratio is 25.7%, well
within A.M. Best's expectation for the current rating levels.
Interest coverage also remained strong through 2016 at 12.0 times.
Due to higher catastrophe losses in 2017, A.M. Best expects
interest coverage to decline in 2017 but remain in the high single
digits, which remains supportive of the current “a+” rating.
Offsetting these positive rating factors are the ongoing
competitive environment within the property/casualty markets,
Travelers’ relatively significant exposure to natural and man-made
catastrophes and challenges in its personal auto business.
Travelers has comprehensive reinsurance and risk management
programs in place to manage its spread of risk and limit its
overall exposure. Despite reporting an increased level of
catastrophe losses in 2011 and 2012, Travelers reported solid
returns in those years while maintaining strong liquidity and
risk-adjusted capitalization, demonstrating the group’s
conservative operating philosophy, strong business profile and
comprehensive risk management program. A.M. Best expects that this
will also be the case in 2017, when earnings will be pressured by
catastrophe losses related to Hurricanes Harvey, Irma, and Maria.
Expense reductions and the implementation of the Quantum 2.0
underwriting system have driven recent growth in personal auto.
A.M. Best expects that the losses incurred by Travelers
following the recent catastrophic events, including Hurricanes
Harvey, Irma and Maria and recent seismic activity in Mexico, will
be contained within the organization’s risk tolerances, although
these will, as noted above, have a negative impact on earnings for
the year. A.M. Best will monitor Travelers’ loss activity
associated with these events and will update its assessment of
Travelers’ risk management capabilities and ratings should there be
a material deviation from expectations.
The ratings of TCSA and its 100% reinsured affiliate, TCSCE,
primarily recognize the companies’ strong consolidated
risk-adjusted capitalization, specialized underwriting expertise,
highly favorable underwriting and operating performance and
leadership position in the surety, fidelity and management
liability segments. These strengths are partially offset by TCSA’s
limited product diversification, as well as the negative impact
that continued competitive property/casualty markets and
challenging macroeconomic conditions may have on premium and
profitability levels.
The ratings of TICC reflect its superior risk-adjusted
capitalization, favorable underwriting and operating profitability,
excellent brand recognition, strong profile as a leading specialty
lines writer in the surety and corporate management liability
segments, as well as the implicit and explicit support received
from its direct parent, TCSA, as well as its ultimate parent, TRV.
Partially offsetting these positive rating factors are continued
soft market conditions and its relatively elevated expense ratio
due, in part, to investments in technology.
The ratings of Dominion reflect its solid risk-adjusted
capitalization; excellent brand recognition; established nationwide
Canadian market presence, with a focus in Ontario; and the implicit
and explicit support it receives from its parent, TRV. Partially
offsetting these positive rating factors is the company’s
fluctuating operating performance, which was impacted in 2016 by
catastrophe losses. Additional offsetting factors include recent
increased competition and continued lower investment yields.
The ratings of First Floridian recognize its strong
risk-adjusted capitalization, operating efficiencies and local
market focus, which enables it to respond effectively to issues
associated with Florida’s personal lines market, and the additional
operational support and financial flexibility afforded by TRV. The
company has generated strong operating results during the recent
five- and 10-year periods as evidenced by its average pre-tax and
total return measures. However, this strong performance coincided
with a period during which no significant hurricanes made landfall
in Florida.
Partially offsetting these strengths are First Floridian’s
continued, albeit declining, exposure to catastrophe losses and
single state geographic concentration in Florida. The company's
underwriting performance is expected to deteriorate sharply in
2017, due to losses from Hurricane Irma, which impacted Florida in
the third quarter of 2017. A.M. nevertheless expects First
Floridian’s risk-adjusted capitalization to remain strongly
supportive of its ratings.
The ratings of Premier acknowledge its strong risk-adjusted
capitalization, historically favorable operating profitability and
the additional operational support and financial flexibility
afforded by Travelers and TRV. These positive rating factors are
partly offset by Premier’s underwriting losses earlier in most
recent five-year period and the concentration of its business in a
single state and line of business, specifically, Massachusetts
private passenger automobile. As noted above, the company has been
placed into run-off and its ratings have been withdrawn concurrent
with the affirmation.
Positive rating movement is unlikely in the near term. Factors
that could lead to negative rating actions include deterioration in
underwriting and operating performance to a level below A.M. Best’s
expectations, an erosion of surplus that causes a decline in
risk-adjusted capital to a level that is no longer supportive of
the current ratings or a deterioration in TRV’s overall financial
strength or credit quality.
For a complete listing of The Travelers Companies, Inc.’s
FSRs, Long-Term ICRs, Long-Term IRs and Short-Term IRs, please
visit The Travelers Companies, Inc.
This press release relates to rating(s) that have been
published on A.M. 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 A.M.
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 A.M. Best press releases, please view
Guide for Media - Proper Use of Best’s Credit Ratings and A.M.
Best Rating Action Press Releases.
A.M. Best is the world’s oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20171005006291/en/
A.M. BestGreg Dickerson, 908-439-2200, ext.
5161Senior Financial
Analystgregory.dickerson@ambest.comorChristopher Sharkey,
908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJennifer Marshall,
908-439-2200, ext.
5327Directorjennifer.marshall@ambest.comorJim Peavy,
908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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