AM Best Downgrades Issuer Credit Rating of Georgia’s Southern General

A.M. Best Co. has downgraded the issuer credit rating of Southern General Underwriters Insurance Company (SGU) Marietta, Georgia, to “bbb” from “bbb+” and affirmed the financial strength rating of B++ (Good). Concurrently, A.M. Best Co. has affirmed the financial strength rating of B++ and issuer credit rating of “bbb+” of Southern General Insurance Company (SGIC), an affiliate of SGU. All entities are domiciled in Marietta, GA. The outlook for all ratings is stable.

The rating actions reflect SGU’s unfavorable operating performance in recent years, impacted by its elevated expense structure and the increase in weather-related events. In response to these declining operating trends, the company has taken aggressive moves to reduce expenses and has withdrawn from the homeowners’ line of business. The ratings also reflect that SGU will maintain a modest business profile as it concentrates on a small book of mobile home policies. Offsetting these negative factors is the company’s favorable risk-adjusted capitalization.

The ratings and outlook of SGIC are supported by its favorable risk-adjusted capitalization, solid fee income, conservative investment portfolio and well established market presence with its long-term agency relationships.

Partially offsetting these positive factors are the company’s variable operating performance in recent years, as well as its limited geographic spread and product offerings. Property losses have impacted SGIC due to its participation in an inter-company pooling agreement with SGU. However, since the agreement was recently terminated, less volatility is anticipated in SGIC’s loss results, as it will continue to focus on its personal automobile line of business.

A.M. Best also has withdrawn the FSR of B++ (Good) and ICR of “bbb+” of Southern General Group (Marietta, GA) and assigned a category NR-5 (Not Formally Followed) to the FSR and an “nr” to the ICR. These rating actions follow the recent dissolution of a pooling agreement between SGU and SGIC.

Topics Georgia AM Best