AM Best Revises Outlooks to Negative for NAMIC Insurance Company, Inc.

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” of NAMIC Insurance Company, Inc. (NAMICO) (Indianapolis, IN).

The Credit Ratings (ratings) reflect NAMICO’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The negative outlooks reflect a trend of deteriorating underwriting performance in recent years, attributable to an increase in the number of high severity losses. This has resulted in combined ratios that have been significantly elevated in two of the past five years. Additionally, the negative outlooks reflect AM Best’s concern regarding the company’s ERM process. In particular, there has been a demonstrated weakness in the company’s overall claims management process. Most recently, the company was required to re-file its 2019 annual statement due to a reserve increase for the 2019 financial year. Accordingly, this was classified as a Type 1 – Subsequent Event that led to a sizeable increase in the reported combined ratio. While management is undertaking a number of initiatives to address this issue, including a review of all open and potential claims and process changes as it applies to claims tracking, the ultimate effectiveness of these efforts is somewhat uncertain.

AM Best’s balance sheet strength assessment of very strong is supported by NAMICO’s risk-adjusted capitalization being at the strongest level, along with positive growth in policyholders’ surplus over the past five years that was offset partially by limitations in its financial flexibility and scale of operations. NAMICO’s neutral business profile assessment is driven largely by its strong niche market in the mutual insurer segment coupled with the company’s favorable geographic diversification.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.