HEREFORD INS CO
Major Rating Factors:
Poor long-term capitalization index (2.8 on a scale of 0 to 10) based on weak current risk adjusted capital (moderate loss scenario). A history of deficient reserves (1.4). Underreserving can have an adverse impact on capital and profits. In four of the last five years reserves (two year development) were between 39% and 52% deficient.
Other Rating Factors:
Weak overall results on stability tests (1.5) including weak results on operational trends and weak risk adjusted capital in prior years. Good overall profitability index (5.8). Good expense controls. Return on equity has been fair, averaging 9.2% over the past five years. Good liquidity (6.6) with sufficient resources (cash flows and marketable investments) to handle a spike in claims.
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:
Personal/comm auto (89.9%), work comp (10.1%)
Licensed in:
NJ, NY
Principal Investments:
Investment grade bonds (89.2%), cash (6.0%), common stock (1.4%), non investment grade bonds (0.6%), preferred stock (0.2%), other (2.7%)