Major Rating Factors: Poor long-term capitalization index (1.3 on a scale of 0 to 10) based on weak current risk adjusted capital (severe and moderate loss scenarios). Weak overall results on stability tests (1.3) including weak risk adjusted capital in prior years, weak results on operational trends and lack of operational experience. The largest net exposure for one risk is excessive at 7.5% of capital.
Other Rating Factors: Fair reserve development (4.0) as reserves have generally been sufficient to cover claims. In 2020, the one year reserve development was 23% deficient. Fair profitability index (4.5) with operating losses during 2018 and 2020. Average return on equity over the last five years has been poor at -0.6%. Good liquidity (6.7) with sufficient resources (cash flows and marketable investments) to handle a spike in claims.
Stability Factors: C - Past results on our Risk-Adjusted Capital tests. E - Lack of operating experience. T - Significant trends in critical asset, liability, income or expense items.
Principal Lines of Business: Fire (9.1%), product liab. (2.4%), other (88.5%)
Licensed in: All states, the District of Columbia and Puerto Rico
Principal Investments: Investment grade bonds (87.6%), cash (6.5%), non investment grade bonds (5.9%)