UPDATE -- State National Companies A.M. Best “A” (Excellent) Rating Affirmed
August 26 2016 - 9:19AM
State National Companies, Inc. (NASDAQ:SNC) today announced that
A.M. Best has revised the issuer credit rating (ICR) outlook to
positive from stable and affirmed the financial strength rating
(FSR) of A (Excellent) and the ICRs of “a” of State National
Insurance Company, Inc. and its subsidiaries, National Specialty
Insurance Company and United Specialty Insurance Company, which
operate under a pooling agreement and are collectively referred to
as State National Group (State National). The outlook for the FSR
remains stable.
A.M. Best stated the following in a press
release dated August 25, 2016:
The revised ICR outlook reflects State National’s strong
risk-adjusted capitalization, extended history of sustained
operating profitability driven by its core collateral protection
insurance business and dominant market position providing fronting
services. Additional favorable rating factors include the group’s
extensive enterprise risk management programs tailored to its
business model and capability managing collateralized counter-party
relationships.
These positive rating factors are partially tempered by the
elevated ceded leverage from the extensive use of reinsurance. This
risk is somewhat mitigated by the long-standing and successful
process to maintain collateral to support recoverable amounts.
Furthermore, this risk is controlled by indemnification agreements
contained within the reinsurance contracts. In recent years, the
program business has grown significantly, and this portfolio
includes participation from third-party capital providers.
The ratings of State National Companies are based on its role as
the ultimate parent holding company of State National. As of Dec.
31, 2015, debt-to-capital and debt-to-tangible capital ratios
(excluding other comprehensive income/loss) were 14.5% and 14.8%,
respectively. Furthermore, interest coverage and cash flow for the
parent is exceptionally strong.
The ratings of State National and State National Companies could
receive positive support from improved operating results or further
advancements in overall profitability. Key factors that could
result in negative rating action include a significant decline in
stand-alone risk-adjusted capitalization, operating performance
over a sustained period that does not meet A.M. Best’s
expectations, significant adjustments to the organization's
business model, including provisions in the reinsurance treaties,
or a dispute regarding reinsurance recoverable amounts.
About State National Companies,
Inc.
State National Companies, Inc. (NASDAQ:SNC) is a
leading specialty provider of property and casualty insurance
services operating in two niche markets across the United
States. In its Lender Services segment, the Company
specializes in providing collateral protection insurance, which
insures personal automobiles and other vehicles held as collateral
for loans made by credit unions, banks and specialty finance
companies. In its Program Services segment, the Company
leverages its “A” (Excellent) A.M. Best rating, expansive licenses
and reputation to provide access to the U.S. property and casualty
insurance market in exchange for ceding fees. To learn more,
please visit www.statenational.com. State National routinely
posts important Company information on its website.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS Various statements contained in this press release are
forward-looking statements made pursuant to the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements may include projections and
estimates concerning the timing and success of specific projects
and our future production, revenues, income and capital spending.
Our forward-looking statements are generally, but not always,
accompanied by words such as “estimate,” “believe,” “expect,”
“will,” “plan,” “target,” “could” or other words that convey the
uncertainty of future events or outcomes.
There can be no assurance that actual
developments will be those anticipated by us. Actual results may
differ materially from those expressed or implied in these
statements as a result of significant risks and uncertainties,
including, but not limited to, our ability to recover from our
capacity providers, the cost and availability of reinsurance
coverage, challenges to our use of issuing carrier or fronting
arrangements by regulators or changes in state or federal
insurance or other statutes or regulations, our dependence on a
limited number of business partners, potential regulatory scrutiny
of collateral protection insurance, level of new car sales,
availability of credit for vehicle purchases and other factors
affecting automobile financing, our ability to compete effectively,
a downgrade in the financial strength ratings of our insurance
subsidiaries, our ability to accurately underwrite and price our
products and to maintain and establish accurate loss reserves,
changes in interest rates or other changes in the financial
markets, the effects of emerging claim and coverage issues, changes
in the demand for our products, the effect of general economic
conditions, breaches in data security or other disruptions with our
technology, and changes in pricing or other competitive
environments.
Forward-looking statements involve inherent
risks and uncertainties that are difficult to predict, many of
which are beyond our control. Additional information about these
risks and uncertainties is contained in our filings with the
Securities and Exchange Commission. The forward-looking statements
in this press release speak only as of the date of this release,
and we undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as may be required by
law.
CONTACTS:
State National Companies, Inc.
David Hale, COO & CFO
817-265-2000
Dennard ▪ Lascar Associates
Rick Black
713-529-6600
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