A.M. Best Company Downgrades Ratings of National Automotive Insurance Company [Professional Services Close – Up]

A.M. Best Company has downgraded the financial strength rating to C (Weak) from B (Fair) and issuer credit rating to ccc from bb of National Automotive Insurance Company (National Automotive) (Metairie, La.).

In a release dated March 12, A.M. Best Company said that the outlook for both ratings is negative.

The rating downgrades reflect National Automotive's significant decline in capitalization following adverse reserve development in its non-standard automobile business, which resulted in the need for significant reserve strengthening in the fourth quarter of 2012, causing a material decline in its surplus. National Automotive's adverse reserve development was driven by increased auto liability losses and an increase in the required minimum statutory automobile limits in Louisiana.

The negative outlook reflects National Automotive's reduced surplus and decline in its risk-adjusted capitalization. The outlook further considers the company's ongoing challenges to improve underwriting results over the near term and avoid additional surplus losses.

Factors that could result in future negative rating actions include a continued deterioration in National Automotive's underwriting performance, continued adverse reserve development or erosion of its capital base.

A.M. Best Company is an insurance rating and information source.

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