A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a+” of Texas-based National Lloyds Insurance Company (National Lloyds) as well as the FSR of A (Excellent) and ICR of “a” of American Summit Insurance Company (American Summit).
Additionally, A.M. Best has affirmed the ICR of “bbb+” of Hilltop Holdings Inc. (HTH), headquartered in Dallas, Texas. National Lloyds and American Summit are subsidiaries of HTH, which operates as a public holding company. The outlook for all ratings is stable.
All companies are domiciled in Waco, Texas, except where specified.
The ratings of National Lloyds reflect its solid risk-adjusted capitalization, favorable operating earnings in recent years and local market expertise within its niche of the personal property insurance market. These 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. This was evidenced during 2008 and 2009 when multiple hurricane and tornado/hail events negatively impacted underwriting results. However, National Lloyds continues to improve its underwriting guidelines in an effort to reduce inherent risk.
The ratings of American Summit recognize its solid risk-adjusted capitalization and favorable operating performance. These positive rating factors are somewhat offset by American Summit’s geographic concentration of risk and limited product offerings, as primarily a provider of insurance for the mobile home market. As a result, American Summit’s underwriting performance is susceptible to the frequency and severity of localized storm activity. This was evidenced in 2010 as a large hailstorm in Arizona negatively impacted underwriting results.
However, American Summit maintains a prudent catastrophe reinsurance program in conjunction with its affiliate company, National Lloyds, to mitigate losses associated with severe weather-related catastrophe events.
Source: A.M. Best
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