AM Best downgraded the Financial Strength Rating to B (Fair) from B+ (Good) and the Long-Term Issuer Credit Rating to “bb+” (Fair) from “bbb-” (Good) of Casualty Underwriters Insurance Co. in Salt Lake City, Utah.
The outlook of the ratings has been revised to stable from negative.
“The ratings reflect CUIC’s balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management,” AM Best said in a release announcing the change.
AM Best said the ratings reflect its concerns over the company’s operating performance due to volatility and “its prolonged inability to generate favorable underwriting results leading to surplus erosion in two of the past five years.”
A decline in operating performance resulted from an increased retention in CUIC’s private passenger automobile book of business, and the increased retention on the auto book to 50% from 20% as of Jan. 1, 2019, has reduced the amount of ceding commissions CUIC receives, and that has increased the company’s expense and combined ratios, according to AM Best.
CUIC’s balance sheet strength assessment remains at the strong level, and CUIC maintains the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio. CUIC also maintains a diversified high-quality investment portfolio consisting mostly of stocks followed by long-term bonds, according to AM Best.
CUIC’s products focus on private passenger non-standard auto and are concentrated in Utah and Idaho, however the company has expanded into North Dakota recently to diversify the concentration in mainly a single state, according to AM Best.
Topics Underwriting AM Best Casualty
Was this article valuable?
Here are more articles you may enjoy.
Insurers Hike Rates as Extreme Storms Like Beryl Proliferate 
Deere Retreats From Diversity Measures After Online Attacks 
Biden Administration Raises FEMA Bar for Flood Resilience 
Marsh McLennan Agency to Acquire The Horton Group 
