A.M. Best Affirms Credit Ratings of Members of Donegal Insurance Group and Donegal Group Inc.
January 04 2017 - 2:09PM
Business Wire
A.M. Best has affirmed the Financial Strength Rating
(FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings
(Long-Term ICR) of “a” of the members of the Donegal Insurance
Group (Donegal Group). Concurrently, A.M. Best has affirmed the
Long-Term ICR of “bbb” of the publicly traded holding company,
Donegal Group Inc. (Delaware) [NASDAQ: DGICA and DGICB]. The
outlook of these Credit Ratings (ratings) is stable. (See below for
a detailed listing of the member companies.)
The affirmation of the ratings of the Donegal Group members is
based on their excellent risk-adjusted capitalization, sound
overall liquidity, moderate five-year operating earnings and solid
business profile, which includes geographic and product line
diversification, effective use of technology in the independent
agency distribution channel and a history of successful expansion
through strategic acquisitions and affiliations. Although the
individual members within the Donegal Group play a specific role in
the organization’s overall business plan and their operating
performances may vary, each contributes favorably to the group’s
risk-adjusted capitalization. In addition, each member supports the
corporate business strategy and benefits from shared senior
management, intercompany reinsurance and the added financial
flexibility of Donegal Group Inc. to raise capital through debt or
equity offerings during favorable investment markets.
These positive rating factors are partially offset by the
organization’s overall less than favorable operating performance in
the most recent five-year period (2011 through 2015) compared to
the previous five-year period (2006 through 2010) and a slightly
higher expense structure. Operating performance over the most
recent five-year period has been adversely impacted by more
frequent and severe weather events. However, A.M. Best continues to
look favorably upon the actions being taken by management to
improve operating performance through rate increases, stronger
underwriting standards and use of enterprise risk management. These
initiatives and reduced weather activity have contributed to
improved underwriting results and operating earnings in recent
years.
The affirmation of the Long-Term ICR of Donegal Group Inc.
recognizes the overall financial strength of its property/casualty
insurance operation, its moderate amount of financial leverage and
the subordination of its creditors to the insurance companies’
policyholders.
The FSR of A (Excellent) and the Long Term ICRs of “a” have been
affirmed for the following members of Donegal Insurance
Group:
- Atlantic States Insurance
Company
- Donegal Mutual Insurance
Company
- Le Mars Insurance Company
- Michigan Insurance Company
- The Peninsula Insurance
Company
- Peninsula Indemnity Company
- Sheboygan Falls Insurance
Company
- Southern Insurance Company of
Virginia
- Southern Mutual Insurance
Company
This press release relates to Credit Ratings 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.
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/20170104006372/en/
A.M. BestKenneth Tappen, +1-908-439-2200, ext.
5248Senior Financial
Analystkenneth.tappen@ambest.comorRichard
Attanasio, +1-908-439-2200, ext. 5432Senior
Directorrichard.attanasio@ambest.comorChristopher
Sharkey, +1-908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim
Peavy, +1-908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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