A.M. Best Upgrades American Summit; Assigns Rating to Hilltop Holdings

A.M. Best Co. has upgraded the financial strength rating (FSR) to A (Excellent) from A- (Excellent) and issuer credit rating (ICR) to “a” from “a-” of American Summit Insurance Company (American Summit).

Concurrently, Best affirmed the FSR of A (Excellent) and ICR of “a+” of American Summit affiliate National Lloyds Insurance Company (National Lloyds). Both companies are domiciled in Waco, Texas, and are subsidiaries of Hilltop Holdings Inc. (HTH), headquartered in Dallas.

The outlook for these ratings is stable.

A.M. Best has assigned an ICR of “bbb+” to HTH with a stable outlook. HTH currently operates as an insurance holding company, although it intends to make opportunistic acquisitions on an ongoing basis.

The rating actions on American Summit recognize its solid risk-adjusted capitalization, geographic spread of risk in moderately catastrophe prone areas and its continued profitable underwriting performance. In addition, the ratings reflect prudent risk management strategies and underwriting initiatives, which continue to enhance operating performance.

The positive rating factors are somewhat offset by American Summit’s elevated underwriting expense ratio and low investment yields.

The rating actions on National Lloyds reflect its solid risk-adjusted capitalization, favorable operating performance in recent years and local market expertise within its niche of the personal property insurance market.

The positive rating factors are somewhat offset by National Lloyds’ geographic concentration of risk primarily in the Texas marketplace, with susceptibility to frequent and severe weather related events. As a result, the company posted underwriting losses in 2008 and 2009, due to multiple hurricane and tornado/hail events. However, National Lloyds continues to improve its underwriting guidelines in an effort to reduce inherent risk.

Source: A.M. Best

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