Major Rating Factors:
Fair overall results on stability tests (3.7 on a scale of 0 to 10) including weak results on operational trends. Strengths include potentially strong support from affiliation with Navigators Group Inc. The largest net exposure for one risk is conservative at 1.3% of capital. A history of deficient reserves (2.2) that places pressure on both capital and profits. In four of the last five years reserves were between 21% and 26% deficient.
Other Rating Factors:
Good overall profitability index (6.0) despite operating losses during 2019. Return on equity has been low, averaging 4.7% over the past five years. Good liquidity (6.8) with sufficient resources (cash flows and marketable investments) to handle a spike in claims. Strong long-term capitalization index (7.1) based on excellent current risk adjusted capital (severe and moderate loss scenarios), despite some fluctuation in capital levels.
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 (7.8%), comm multi (3.3%), fin guar/surety (0.3%), other (88.5%)
Licensed in:
All states, the District of Columbia and Puerto Rico
Principal Investments:
Investment grade bonds (68.8%), common stock (4.6%), non investment grade bonds (3.4%), cash (1.2%), preferred stock (1.0%), other (21.0%)