AM Best Affirms Credit Ratings of Subsidiaries of Old Republic International Corporation
May 21 2020 - 3:35PM
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 members of Old Republic Insurance Companies (Old
Republic). (See below for a detailed list of companies.)
Concurrently, AM Best has affirmed the FSR of A (Excellent) and the
Long-Term ICR of “a+” of Old Republic Insurance Company of Canada
(Old Republic Canada) (Hamilton, Ontario). At the same time, AM
Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs
of “a+” of Old Republic National Title Insurance Company (Tampa,
FL) and American Guaranty Title Insurance Company (Oklahoma City,
OK) (collectively referred to as Old Republic Title Insurance Group
[ORTIG]). In addition, AM Best has affirmed the FSR of B++ (Good)
and the Long-Term ICR of “bbb+” of Old Republic Life Insurance
Company (ORL) (Chicago, IL). The outlook of these Credit Ratings
(ratings) is 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 the flagship carrier for the Old Republic
Insurance enterprise and one of the top 35 property/casualty
insurers in the United States. It 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, commercial auto and general
liability. Old Republic benefits from its expertise within the
alternative risk transfer market and specialty commercial segments,
as well as historically solid profitability, expertise in its
respective individual business specialties and well-recognized
franchises. Partially offsetting these positive rating factors is
the variability in prior-year reserve development. In addition, Old
Republic maintains an elevated exposure to common stocks within its
investment portfolio; however, it remains within established
tolerance levels. The company continues to have a very modest
exposure 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 recognizes the synergies it
gains as an affiliate of Great West Casualty Company, as well as
its accident and sickness business. Partially offsetting these
positive rating factors are the company’s limited product offering
and challenging market environment in Canada, which have impacted
the company’s underwriting performance in recent years, although
the more recent years show improved results.
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. The
ratings of ORTIG also reflect 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 recognize its modest leverage measures and
strong reserving practices. The majority of ORTIG’s premiums and
fees are generated through independent agents. This enables ORTIG
to better manage down cycles, as fixed costs generally are lower
for that distribution channel. 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. However, 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 of ORL also reflect its risk-adjusted
capitalization, which is assessed as strongest, as measured by
Best’s Capital Adequacy Ratio (BCAR). Invested asset holdings are
of good credit quality, as the portfolio is designed to minimize
credit default risk rather than maximizing yield. Earnings
generally have been positive but fluctuating in recent years. Due
to the small size of the reserves, any increase in claims and/or
mortality will cause large fluctuations in earnings. Premiums have
declined over the past several years, as the closed term block
premiums run off, and the occupational accident premiums were lower
due to the termination of a large policy in 2018. The company’s
business profile consists of a closed block of term life insurance
and the actively marketed occupational accident line. Despite its
modest size, management maintains that ORL is important
strategically.
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:
- BITCO General Insurance Corporation
- BITCO National Insurance Company
- Great West Casualty Company
- Manufacturers Alliance Insurance Company
- Old Republic General Insurance Corporation
- Old Republic Insurance Company
- Old Republic Lloyds of Texas
- Old Republic Surety Company
- Old Republic Union Insurance Company
- Pennsylvania Manufacturers Indemnity Company
- Pennsylvania Manufacturers’ Association 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 Guide to 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 credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in New York, London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
Copyright © 2020 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/20200521005712/en/
Ana Daley Financial Analyst—P/C +1 908 439
2200, ext. 5326 ana.daley@ambest.com Frank Walko
Financial Analyst—L/H +1 908 439 2200, ext. 5072
frank.walko@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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