AM Best financial rating service announced it has downgraded the outlook for North Carolina-based Discovery Insurance Co., from stable to negative after a decline in the non-standard auto insurer’s earnings and surplus.
“This decline is due primarily to deteriorating underwriting results as a result of declining written and earned premiums due to pricing pressures from increased competition of market entrants into the non-standard automobile insurance marketplace in North Carolina,” AM Best said in a press release.
The insurer’s financial strength rating remained at “B+ Good” and its long-term issuer credit rating was affirmed at “bbb- Good.”
The global rating firm said underwriting results have been affected by challenges in the automobile market, including supply chain issues, labor shortages and higher prices for used cars.
“While management plans to take various pricing actions to return to profitable underwriting performance, it is uncertain whether or not these actions will be sufficient to return Discovery to its historic operating profitability over the intermediate term,” AM Best noted.
Founded in 1992, Discovery is headquartered in Kinston, North Carolina, and is domiciled in the state.
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