AM Best Takes Various Rating Actions on Subsidiaries of Old Republic International Corporation
May 17 2019 - 1:15PM
Business Wire
AM Best has affirmed the Financial Strength Rating (FSR)
of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term
ICRs) of “aa-” of certain members of Old Republic Insurance
Companies (Old Republic). (See below for a detailed list of
companies.) Additionally, AM Best has upgraded the FSRs to A+
(Superior) from A (Excellent) and the Long-Term ICRs to “aa-” from
“a” of Old Republic General Insurance Corporation (ORGENCO)
(Chicago, IL) and the members of Old Republic that are now part of
this rating unit. (See below for a detailed list of companies.)
Concurrently, AM Best has affirmed the FSR of A (Excellent) and
Long-Term ICR of “a+” of Old Republic Insurance Company of Canada
(Old Republic Canada) (Hamilton, Ontario).
At the same time, AM Best has upgraded the Long-Term ICR to “a+”
from “a” and affirmed the FSR of A (Excellent) of Old Republic
National Title Insurance Company (Tampa, FL) and American Guaranty
Title Insurance Company (Oklahoma City, OK) (collectively referred
to as the Old Republic Title Insurance Group [ORTIG]). In addition,
AM Best has affirmed the FSR of B++ (Good) and Long-Term ICR of
“bbb+” of Old Republic Life Insurance Company (ORL) (Chicago, IL).
The outlooks for all of the aforementioned Credit Ratings (ratings)
are stable. All companies are subsidiaries of Old Republic
International Corporation [NYSE: ORI].
The ratings of Old Republic, which is considered the lead rating
unit in the Old Republic International Corporation enterprise,
reflect its balance sheet strength, which AM Best categorizes as
strongest, as well as its strong operating performance, favorable
business profile and appropriate enterprise risk management
(ERM).
Old Republic is one of the top 35 property/casualty insurers in
the United States and is a commercial lines insurance carrier that
focuses predominantly on providing liability insurance for specific
sectors of the North American economy. Major lines of business
include workers’ compensation and commercial auto. Old Republic
benefits from its expertise within the alternative risk transfer
(ART) market and specialty commercial segments, as well as
management’s emphasis on loss control, commitment to delivering
quality insurance-related services and by limiting, over the past
few years, its exposure to unprofitable business. Partially
offsetting these positive rating factors is a loss ratio that is
slightly above the commercial casualty composite. In addition, Old
Republic maintains an elevated exposure to common stocks within its
investment portfolio, although it is within established tolerance
levels. To a lesser degree, the company remains exposed to asbestos
liabilities.
The ratings of Old Republic Canada reflect its balance sheet
strength, which AM Best categorizes as very strong, as well as its
adequate operating performance, neutral business profile and
appropriate ERM.
The ratings of Old Republic Canada also acknowledge the
synergies it realizes as an affiliate of Great West and other
affiliates. Partially offsetting these positive rating factors are
the company’s narrow product offerings, the current soft market
conditions and challenging judicial environment in Canada, which
have translated into the company’s recent below average commercial
auto performance.
The ratings of ORTIG reflect its balance sheet strength, which
AM Best categorizes as strongest, as well as its adequate operating
performance, neutral business profile and appropriate ERM. It also
reflects the implicit support the group receives from its position
in the Old Republic enterprise and its strategic role within the
organization.
The ratings of ORTIG also recognize its strong liquidity and
reserving practices, which remain among the most prudent in the
title industry. While the group has increased its premium volume
substantially in recent years, operating results have continued to
be favorable as a result of its consistent underwriting
performance. The increase in premium volume also has enhanced the
group’s presence, allowing it to become more competitive. However,
an offsetting rating factor is the group’s higher underwriting
leverage measures due to the rapid increase in premium volume over
the past five years. AM Best expects that ORTIG will continue to
generate adequate underwriting and operating results while
maintaining the strongest level of risk-adjusted capitalization in
the near-to-medium term.
The ratings of ORL reflect its balance sheet strength, which AM
Best categorizes as very strong, as well as its marginal operating
performance, limited business profile and appropriate ERM.
The ratings for ORL are based on its risk-adjusted
capitalization being at the strongest level, as measured by the
Best Capital Adequacy Ratio (BCAR), along with an invested asset
portfolio of good credit quality. Earnings have been positive as
ORL’s occupational accident line has been profitable but partially
offset by increased mortality in its ordinary life line of
business, which is comprised mostly of closed block term life
insurance. Premiums have declined in the current year due to the
runoff nature of its term block of business and the lapse of a
large policyholder in its occupational accident line. ORL’s
business profile is modest, with only the occupational accident
line actively marketed. However, management considers ORL to be
integral to the group’s overall strategy.
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” have
been affirmed, each with a stable outlook, for the following
members of Old Republic Insurance Companies:
- Old Republic Insurance Company
- Great West Casualty Company
- BITCO General Insurance
Corporation
- BITCO National Insurance Company
- Old Republic Lloyds of Texas
The FSR has been upgraded to A+ (Superior) from A (Excellent)
and the Long-Term ICRs to “aa-” from “a” each with a stable outlook
for the following members of Old Republic Insurance Companies:
- Pennsylvania Manufacturers Association
Insurance Company
- Manufacturers Alliance Insurance
Company
- Pennsylvania Manufacturers Indemnity
Company
- Old Republic Union Insurance
Company
- Old Republic Surety Company
- Old Republic General Insurance
Corporation
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/20190517005458/en/
Lewis DeLosa, CFAFinancial Analyst – P/C+1 908
439 2200, ext. 5529lewis.delosa@ambest.comFrank
WalkoFinancial Analyst – L/H+1 908 439 2200, ext.
5072frank.walko@ambest.comChristopher SharkeyManager,
Public Relations+1 908 439 2200, ext.
5159christopher.sharkey@ambest.comJim PeavyDirector,
Public Relations+1 908 439 2200, ext.
5644james.peavy@ambest.com
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