Business & Finance
Business and Finance
Business and Finance
Mon, June 27, 2011
Sun, June 26, 2011
Fri, June 24, 2011 A.M. Best Affirms Ratings of American National Insurance Company and Its Subsidiaries
OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of aa+a of American National Insurance Company (ANICO) (NASDAQ:ANAT). Additionally, A.M. Best has affirmed the FSR of A (Excellent) and ICR of aaa of American National Life Insurance Company of Texas, Garden State Life Insurance Company (League City, TX), Standard Life and Accident Insurance Company, American National Life Insurance Company of New York and Farm Family Life Insurance Company (both domiciled in Glenmont, NY), all subsidiaries of ANICO. The outlook for all ratings is stable. All the above companies are headquartered in Galveston, TX, unless otherwise specified.
"Catastrophe Risk Management Incorporated Within the Rating Analysis"
The rating affirmations of ANICO are based on its good consolidated risk-adjusted capitalization, improved GAAP and statutory earnings including a turnaround in the health line of business, diverse product offerings, which cover life, annuities, health, and property/casualty insurance segments. The ratings also recognize the recovery in ANICOa™s investment portfolio performance, which has resulted in higher net investment income for 2010, as well as realized and unrealized gains in its fixed income portfolio rather than significant losses due to the financial crisis of 2008-2009. ANICO benefits from revenue and income from diverse sources, which include its life/health and property/casualty affiliates, as well as from its non-insurance affiliates. A.M. Best also notes that the financial leverage at ANICO remains modest relative to its consolidated equity level.
Partially offsetting these positive rating factors are ANICOa™s high exposure to interest-sensitive liabilities, variability in GAAP and statutory earnings over the past five years, particularly in its property/casualty lines, growing exposure to mortgage loans and real estate holdings and the challenges of optimizing the companya™s returns on a sustained basis.
The ratings of the life insurance subsidiaries of ANICO acknowledge their improved operating trends, more than adequate risk-adjusted capitalization and continuing contribution to ANICOa™s consolidated results. Partially offsetting these positive rating factors are the life subsidiariesa™ somewhat fluctuating premiums and earnings trends, limited business profiles and the challenges to grow their business lines.
In addition, A.M. Best has affirmed the FSRs of A (Excellent) and ICR of aaa of American National Property and Casualty Group (ANPAC Group) and its members, American National Property and Casualty Company (ANPAC), American National General Insurance Company, American National County Mutual Insurance Company (Galveston, TX) and ANPACa™s separately-rated subsidiaries, American National Lloyds Insurance Company (Galveston, TX) and Pacific Property and Casualty Company (San Jose, CA). The outlook for the ratings is stable. These companies are domiciled in Springfield, MO, unless otherwise specified.
Concurrently,A.M. Best has downgraded the ICR to aaa from aa+a and affirmed the FSR of A (Excellent) of Farm Family Insurance Companies (Farm Family) and its members, Farm Family Casualty Insurance Company and United Farm Family Insurance Company. The outlook for all ratings is stable. These companies are all domiciled in Glenmont, NY. The members of ANPAC Group and Farm Family are all subsidiaries of ANICO.
The revised ICR of Farm Family reflects its trend of declining underwriting and operating profitability over the past five years. However, the ratings recognize its strong capitalization and well-established market position in the Northeast.
Partially offsetting the positive rating factors of Farm Family are its recently declining underwriting and operating results, elevated but improved underwriting leverage and susceptibility to severe weather events and catastrophes.
As evident over the past three years, the companya™s profitability is expected to continue to be pressured by competitive market conditions and regional weather patterns, as well as by legislative, judicial and regulatory actions in the groupa™s key operating states. The ratings also consider the support provided by ANICO to Farm Family and the synergies generated by its sister organization, ANPAC Group.
At the same time, A.M. Best has revised the outlook to stable from negative and affirmed the FSR of A- (Excellent) and ICR of aa-a of ANPAC Louisiana Insurance Company (ANPAC LA) (Mandeville, LA). ANPAC LAa™s revised outlook recognizes the continued financial support provided through its immediate parent, ANPAC, by ANICO.
The principal methodology used in determining these ratings is [ Besta™s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition ], which provides a comprehensive explanation of A.M. Besta™s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: aRisk Management and the Rating Process for Insurance Companiesa; aUnderstanding BCAR for Property/Casualty Insurersa; aUnderstanding BCAR for Life and Health Insurersa; aA.M. Besta™s Ratings & the Treatment of Debta; aNatural Catastrophe Stress Test Methodologya; aCatastrophe Analysis in A.M. Best Ratingsa; aCatastrophe Risk Management Incorporated Within the Rating Analysisa; aEquity Credit for Hybrid Securitiesa; and aRating Members of Insurance Groups.a Methodologies can be found at [ www.ambest.com/ratings/methodology ].
Founded in 1899, A.M. Best Company is the worlda™s oldest and most authoritative insurance rating and information source. For more information, visit [ www.ambest.com ].
Copyright © 2011 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.
