A.M. Best Downgrades Credit Ratings of Capital Insurance Group Members

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has downgraded the Financial Strength Rating to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Rating to “a-“ from “a” of California Capital Insurance Company and its wholly owned subsidiaries: Eagle West Insurance Company, Nevada Capital Insurance Company (Reno, NV) and Monterey Insurance Company. All companies comprise Capital Insurance Group (Capital) and are domiciled in Monterey, CA, except where specified. The outlook of these Credit Ratings (ratings) is stable.

The rating actions reflect a material decline in Capital's capitalization, resulting from a downturn in underwriting results that were driven by variability in the loss reserve development on prior accident years and coupled with the inherent execution risk that comes with strategic operating changes. Geographic concentration risk in California subjected the group’s property catastrophe reinsurance program to be heavily loss-impacted by the active wildfire season. In addition, it exposes the group to competitive market pressures and a challenging legislative and regulatory landscape.

The ratings reflect Capital’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management. Capital’s ratings are supported by the group’s solid risk-adjusted capitalization and historically solid operating performance of the companies that comprise the group, along with the group’s diversified mix of business, local market presence and strong agency relationships.

The positive rating factors are further supported by management’s adherence to sound operating fundamentals, as evidenced by its conservative underwriting guidelines and low investment leverage. Additionally, operating results have benefited from steady investment income over the last five years.

Negative rating action could occur if Capital’s operating performance falls markedly short of A.M. Best’s expectations, resulting in the decline of their risk-adjusted capitalization, or if there were substantial adverse reserve development.

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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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A.M. Best

Samiksha Gupta, +1 908 439 2200, ext. 5658

Financial Analyst

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or

Robert Raber, +1 908 439 2200, ext. 5696

Senior Financial Analyst

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or

Christopher Sharkey, +1 908 439 2200, ext. 5159

Manager, Public Relations

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or

Jim Peavy, +1 908 439 2200, ext. 5644

Director, Public Relations

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Source: A.M. Best