AM Best Withdraws Credit Ratings of Casualty Underwriters Insurance Company

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has downgraded the Financial Strength Rating to D (Poor) from C- (Weak) and the Long-Term Issuer Credit Rating to “c” (Poor) from “cc” (Very Weak) of Casualty Underwriters Insurance Company (CUIC) (Salt Lake City, UT). The outlook of these Credit Ratings (ratings) is negative. Concurrently, AM Best has withdrawn these ratings as CUIC has requested to no longer participate in AM Best’s interactive rating process.

The ratings reflect CUIC’s balance sheet strength, which AM Best assesses as very weak, as well as its marginal operating performance, limited business profile and weak enterprise risk management (ERM).

The rating downgrades reflect material erosion in CUIC’s capital position, elevated leverage metrics and recent adverse loss reserve development, which have weakened the company’s balance sheet materially. Surplus declines reported in four out of the past five years through 2024, have led to significant erosion in the company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The weakened capital position has been attributed to increased volatility in CUIC’s underwriting results in recent periods, due to persistent rate inadequacy, inflationary pressures and increased severity in bodily injury claims owing to rising medical costs. Although management has attempted to address these unfavorable trends through rate adjustments and underwriting actions, these efforts have not proven to be effective. The rating downgrades further reflect additional headwinds faced by CUIC’s ERM structure, which have proven ineffective to mitigate against market challenges and adequately insulate the capital position.

The negative outlooks reflect the very weak BCAR score with a demonstrated pattern of volatility. The negative outlooks further reflect severe deficiencies in risk management capabilities given the material strain placed on the current level of capital.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.