AM Best Affirms Credit Ratings of State Automobile Mutual Insurance Company and Its Operating Subsidiaries
July 16 2020 - 8:34AM
Business Wire
AM Best has affirmed the Financial Strength Rating (FSR)
of A- (Excellent) and the Long-Term Issuer Credit Ratings
(Long-Term ICR) of “a-” of State
Automobile Mutual Insurance Company (State Auto) and its
operating subsidiaries. Concurrently, AM Best has affirmed the
Long-Term ICR of “bbb-” of State Auto’s intermediate holding
company, State Auto Financial
Corporation (STFC) [NASDAQ: STFC]. The outlook of these
Credit Ratings (ratings) is stable. All of the above companies are
headquartered in Columbus, OH. (See below for a listing of the
companies.)
The ratings reflect State Auto’s balance sheet strength, which
AM Best categorizes as strongest, as well as its marginal operating
performance, neutral business profile and appropriate enterprise
risk management (ERM).
The balance sheet assessment of strongest is derived from
risk-adjusted capitalization also being at the strongest level, a
high credit quality investment portfolio, favorable overall loss
reserve development and adequate reinsurance protection. State Auto
also benefits from the financial flexibility and access to capital
afforded by its publicly traded intermediate holding company,
STFC.
Operating performance has been marginal with State Auto impacted
over the past five years by severe weather events, technology
costs, fluctuating premium volume and above average commissions.
Higher underwriting losses were experienced in 2019, largely
reflecting a greater catastrophe impact influenced by adverse
development of hurricane losses from the specialty segment, which
remains in run off. State Auto continues to focus on risk
management initiatives designed to reduce severity, along with
aggressive price monitoring efforts and rate increases.
State Auto writes a diversified mix of personal and commercial
lines of business. There is a fair spread of risk by geography with
modest concentration in the Midwest, exposing the group to storm
loss frequency. The company has maintained a formalized ERM
framework that is appropriate for its size, scope and risk
profile.
Positive rating action could occur if the group improves its
operating results over an extended period of time, such that its
operating performance assessment could be categorized as adequate
rather than marginal. Negative rating action could occur if there
is an occurrence of a sudden large or catastrophic loss that
materially hinders risk-adjusted capitalization or if other balance
sheet considerations, such as loss reserve development or
underwriting leverage, trend in such a way that weakens overall
balance sheet strength.
The FSR of A- (Excellent) and the Long-Term ICRs of “a-” have
been affirmed for the following operating subsidiaries of
State Automobile Mutual Insurance
Company:
- State Auto Property & Casualty Insurance Company
- Milbank Insurance Company
- State Auto Insurance Company of Ohio
- Patrons Mutual Insurance Company of Connecticut
- Meridian Security Insurance Company
- State Auto Insurance Company of Wisconsin
- Rockhill Insurance Company
- Plaza Insurance Company
- American Compensation Insurance Company
- Bloomington Compensation 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/20200716005635/en/
Chris Draghi Senior Financial Analyst +1 908 439 2200, ext.
5043 chris.draghi@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Michelle Baurkot Director +1 908 439 2200, ext.
5314 michelle.baurkot@ambest.com
Jim Peavy Director, Public Relations +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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