Major Rating Factors: Fair reserve development (4.5 on a scale of 0 to 10) as reserves have generally been sufficient to cover claims. Fair overall results on stability tests (3.9) including fair financial strength of affiliated CNA Financial Corp.
Other Rating Factors: Good overall profitability index (6.9). Weak expense controls. Return on equity has been low, averaging 3.3% over the past five years. Strong long-term capitalization index (10.0) based on excellent current risk adjusted capital (severe and moderate loss scenarios). Moreover, capital levels have been consistent in recent years. Excellent liquidity (7.0) with ample operational cash flow and liquid investments.
Stability Factors: A - Financial problems or weaknesses of a parent or affiliate company. 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 (13.7%), personal/comm auto (11.2%), work comp (9.6%), fin guar/surety (2.7%), med mal (1.6%), product liab. (1.3%), fire (1.0%), other (58.8%)
Licensed in: All states, the District of Columbia and Puerto Rico
Principal Investments: Investment grade bonds (89.2%), common stock (9.1%), non investment grade bonds (1.3%), preferred stock (0.2%), cash (0.2%)