Major Rating Factors: A history of deficient reserves (2.4 on a scale of 0 to 10). Underreserving can have an adverse impact on capital and profits. Deficiencies in the two year reserve development occurred in three of the previous five years and ranged between 22% and 66%. Vulnerable liquidity (0.9) as a spike in claims may stretch capacity.
Other Rating Factors: Weak overall results on stability tests (2.2) including weak results on operational trends. The largest net exposure for one risk is high at 4.9% of capital. Fair long-term capitalization index (4.2) based on fair current risk adjusted capital (moderate loss scenario). Fair profitability index (4.1). Good expense controls. Return on equity has been fair, averaging 12.8% over the past five years.
Stability Factors: L - Past results on our liquidity tests. T - Significant trends in critical asset, liability, income or expense items.
Principal Lines of Business: Personal/comm auto (100.0%)
Licensed in: AZ, AR, GA, IL, IN, IA, KY, MS, NV, OH, OK, OR, RI, SC, TX, UT
Principal Investments: Investment grade bonds (85.7%), common stock (4.7%), preferred stock (2.5%), real estate (2.3%), other (4.8%)