Major Rating Factors: Weak overall results on stability tests (1.5 on a scale of 0 to 10) including potential drain of affiliation with Fairfax Financial. The largest net exposure for one risk is excessive at 7.8% of capital. Good overall profitability index (5.7) despite operating losses during 2020 and 2021. Return on equity has been fair, averaging 5.8% over the past five years.
Other Rating Factors: Strong long-term capitalization index (7.1) based on excellent current risk adjusted capital (severe and moderate loss scenarios), despite some fluctuation in capital levels. Ample reserve history (9.3) that helps to protect the company against sharp claims increases. Superior liquidity (9.0) with ample operational cash flow and liquid investments.
Stability Factors: R - Concerns about the financial strength of its reinsurers. T - Significant trends in critical asset, liability, income or expense items.
Principal Lines of Business: Reinsurance (100.0%)
Licensed in: All states except CA, FL
Principal Investments: Investment grade bonds (48.7%), common stock (22.6%), cash (7.1%), non investment grade bonds (2.9%), preferred stock (2.3%), other (16.4%)