Major Rating Factors:
Weak overall results on stability tests (2.2 on a scale of 0 to 10) including potential drain of affiliation with Hallmark Financial Services Inc and weak results on operational trends. The largest net exposure for one risk is high at 4.1% of capital. A history of deficient reserves (2.2) that places pressure on both capital and profits. In the last five years, reserves (two year development) fluctuated between 30% and 22% deficeint.
Other Rating Factors:
Weak profitability index (2.4) with operating losses during 2019 and 2022. Return on equity has been low, averaging 1.3% over the past five years. Strong long-term capitalization index (7.0) based on excellent current risk adjusted capital (severe and moderate loss scenarios), despite some fluctuation in capital levels. Excellent liquidity (7.4) 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:
Personal/comm auto (56.0%), homeowners (0.2%), other (43.9%)
Licensed in:
All states except CO, CT, DC, ME, VT, VA, PR
Principal Investments:
Investment grade bonds (68.4%), common stock (12.6%), non investment grade bonds (10.4%), cash (4.4%), preferred stock (2.0%), other (2.1%)