A.M. Best Withdraws Ratings of Young America Insurance Company [Health & Beauty Close – Up]

Proquest LLC

A.M. Best Co. has removed from under review with negative implications and downgraded the financial strength rating to B (Fair) from B++ (Good) and issuer credit rating to "bb+" from "bbb" of Young America Insurance Company (Young America) (Dallas, TX).

The outlook assigned to both ratings is stable.

Concurrently, A.M. Best has withdrawn the ratings as the company has requested to no longer participate in A.M. Best's interactive rating process.

In the second quarter of 2012, Young America was acquired by EP Loya Group, LP (Loya) (El Paso, TX), in which Loya purchased 100 percent of the equity interests of Young America. Loya does not participate in A.M. Best's interactive rating process. Therefore, Young America's ratings and outlook are based on the most recent financial data available to A.M. Best at year-end 2011 and the company's first quarter of 2012 financial statements.

The rating downgrades reflect Young America's generally negative operating performance, which was led by underwriting losses four of the last five years. Underwriting losses were primarily due to weather-related events during the latest five-year period. As a result, risk-adjusted capitalization deteriorated in 2011 and continued with a downward trend in the first quarter of 2012 as net premiums written and loss reserves increased sharply, while surplus declined marginally. As a result, underwriting leverage ratios also increased.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides an explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process.