A.M. Best Affirms Credits Ratings of The Allstate Corporation and Its Key Subsidiaries; Upgrades Credit Ratings of Allstate New Jersey Insurance Group Members
Concurrently,
Additionally,
Lastly,
The outlook of all these Credit Ratings (ratings) is stable. All the above named companies are headquartered in
Allstate’s strong capital position reflects its favorable earnings, which have contributed to organic surplus growth in each of the past five years on a pre-dividend basis. Allstate’s operating results continue to be favorable due to enhanced pricing sophistication and improved loss cost and expense management while maintaining underwriting discipline. Additionally, Allstate has a significant market presence and strong overall business profile as one of the largest personal lines writers in
Partially offsetting these positive rating attributes is Allstate’s inherent exposure to natural disasters due to its expansive market presence throughout
Key rating drivers that could produce a revision in the outlooks or lead to rating downgrades include risk-adjusted capitalization levels that do not meet A.M. Best’s standards for the present rating level, or consolidated financial leverage that exceeds stated guidelines for the current rating level. Conversely, positive rating action could occur if underwriting and operating performance is sustained at recent levels and risk-adjusted capital remains strong.
The ratings of Allstate Financial reflect its positive and diversified GAAP operating performance, which has benefited from the organization’s strategy to focus on growing its core protection and workplace supplemental health products while continuing to de-emphasize its exposure to spread-based products, and its adequate consolidated stand-alone risk-adjusted capitalization. The affirmations also recognize the financial strength and continued support of Allstate Insurance Company, as well as Allcorp. The rating affirmations also reflect benefits received from the Allstate brand name, as well as the competitive advantages derived from Allstate’s exclusive agencies and insurance specialists that provide cross-selling opportunities.
These strengths are partially offset by Allstate Financial’s increasing allocation to alternative assets, primarily limited partnerships and private equities.
The rating affirmations of First Colonial reflect its solid risk-adjusted capitalization and strong underwriting performance prior to 2015. The ratings also benefit from the explicit and implicit support provided by Allcorp, its ultimate parent. As a subsidiary of Allcorp, First Colonial benefits from its expansive market presence and brand-name recognition.
These positive rating factors are partially offset by the company’s varying underwriting performance over the past three years, which is highly influenced by a host of economic factors, including auto sales. Recently, First Colonial has experienced an upward trend in its loss ratio due to elevated losses associated with its Guaranteed Auto Protection (GAP) product. In an effort to improve the GAP loss experience, management has implemented a host of mitigation initiatives, which include rate increases, enhancements to its pricing segmentation and various other risk management actions.
Negative rating action could occur if underwriting or operating results deteriorate further, which results in a material decline in overall risk-adjusted capitalization. In addition, negative rating action could occur if there is a lessening of parental support provided to First Colonial.
The upgrade of the ratings of the members of Allstate New Jersey reflects favorable risk-adjusted capitalization, consistently profitable operating performance and management’s local market knowledge. These positive rating attributes are partially offset by the group’s business concentration within one state, resulting in potential operating variability due to local market disruptions and localized catastrophic weather events. The ratings further recognize the consistent profitable trend in underwriting profitability in recent years, along with the expectation that trends in capitalization and operating performance will continue in the near to midterm.
Additional positive rating action may result if underwriting and operating results continue to generate organic surplus growth that results in continued strong levels of risk-adjusted capitalization. Negative rating action could occur if underwriting or operating results deteriorate significantly and causes a material decline in overall risk-adjusted capitalization, or if there is a lessening of parental support.
For a complete listing of The Allstate Corporation and its property/casualty and life/health subsidiaries' FSRs, Long-Term ICRs and Long- and Short-Term IRs, please visit The Allstate Corporation.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and
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