Major Rating Factors:
Weak overall results on stability tests (0.9 on a scale of 0 to 10) including potential drain of affiliation with Fairfax Financial, weak results on operational trends and negative cash flow from operations for 2022. Weak profitability index (1.9) with operating losses during 2020 and 2021. Return on equity has been fair, averaging 15.2% over the past five years.
Other Rating Factors:
Strong long-term capitalization index (10.0) based on excellent current risk adjusted capital (severe and moderate loss scenarios), despite some fluctuation in capital levels. Ample reserve history (9.9) that helps to protect the company against sharp claims increases. Excellent liquidity (7.0) with ample operational cash flow and liquid investments.
Stability Factors:
F - Negative cash flow.
R - Concerns about the financial strength of its reinsurers.
T - Significant trends in critical asset, liability, income or expense items.
Principal Lines of Business:
Other (100%)
Licensed in:
All states except CA, FL
Principal Investments:
Common stock (55.5%), investment grade bonds (42.7%), cash (1.2%), non investment grade bonds (0.7%)