Major Rating Factors:
Fair overall results on stability tests (3.1 on a scale of 0 to 10) including potential drain of affiliation with Argo Group Intl Holdings Ltd and weak results on operational trends. The largest net exposure for one risk is acceptable at 2.8% of capital. History of adequate reserve strength (6.0) as reserves have been consistently at an acceptable level.
Other Rating Factors:
Strong long-term capitalization index (7.7) based on excellent current risk adjusted capital (severe and moderate loss scenarios), despite some fluctuation in capital levels. Excellent profitability (8.2) with operating gains in each of the last five years. Return on equity has been good over the last five years, averaging 11.7%. Excellent liquidity (7.1) 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:
Work comp (89.5%), personal/comm auto (2.9%), fin guar/surety (1.3%), other (6.2%)
Licensed in:
All states except CA, PR
Principal Investments:
Investment grade bonds (82.0%), common stock (10.5%), non investment grade bonds (3.5%), cash (2.4%), other (1.6%)