Major Rating Factors: Fair overall results on stability tests (3.4 on a scale of 0 to 10) including potential drain of affiliation with CNA Financial Corp. The largest net exposure for one risk is conservative at 1.3% of capital. Good overall profitability index (6.2). Weak expense controls. Return on equity has been good over the last five years, averaging 10.3%.
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 (8.7) that helps to protect the company against sharp claims increases. Excellent liquidity (7.3) 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: Fin guar/surety (92.7%), other (7.3%)
Licensed in: All states, the District of Columbia and Puerto Rico
Principal Investments: Investment grade bonds (97.3%), non investment grade bonds (1.4%), common stock (1.0%), preferred stock (0.3%)