Major Rating Factors:
Weak overall results on stability tests (2.5 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. The largest net exposure for one risk is conservative at 1.2% of capital. Fair profitability index (3.0). Weak expense controls. Return on equity has been fair, averaging 7.9% 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 (7.7) that can protect against increases in claims costs. Excellent liquidity (7.7) with ample operational cash flow and liquid investments.
Stability Factors:
D - Limited diversification of general business, policy, and/or investment risk.
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:
Comm multi (36.4%), personal/comm auto (0.8%), med mal (0.2%), other (62.5%)
Licensed in:
All states, the District of Columbia and Puerto Rico
Principal Investments:
Investment grade bonds (61.2%), cash (6.6%), common stock (3.8%), other (28.3%)