A.M. Best Affirms Ratings of Service Insurance Group and Its Member
OLDWICK, N.J.-(Business Wire)-September 28, 2009 - A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Service Insurance Group (Service) and its member, Service Lloyds Insurance Company. The ratings are based on the consolidated results of Service Lloyds Insurance Company and its run-off subsidiary, Heartland Lloyds Insurance Company, although the ratings apply only to Service Lloyds Insurance Company.
Concurrently, A.M. Best has affirmed the FSR of B+ (Good) and ICR of “bbb-” of Service Life & Casualty Insurance Company (Service Life & Casualty). The outlook for all ratings is stable. All companies are domiciled in Austin, TX.
The ratings of Service reflect the group’s excellent capitalization, strong operating earnings achieved through prudent reserving practices and solid investment income, and established market presence within its niche segments.
Partially offsetting these positive factors is Service’s concentration risk as a single state workers’ compensation writer, which potentially exposes the group to changes occurring within the economic, legislative and regulatory environments.
The affirmation of the ratings for Service Life & Casualty recognizes its adequate level of capitalization and positive earnings performance over a five-year period. Offsetting factors include the company’s weakened business profile as it has stopped the direct issuance of new credit insurance policies. Additionally, Service Life & Casualty has experienced declining credit insurance premiums and has a high concentration of real estate, mortgage loans and other NAIC Schedule BA asset investments, all of which are less liquid, relative to its capital position.
For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.
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