Best’s News & Research Service - October 01, 2014 02:40 PM (EDT)
A.M. Best Upgrades Issuer Credit Rating of United Automobile Insurance Company
Oldwick //BestWire// - A.M. Best has upgraded the issuer credit rating (ICR) to "ccc+" from "ccc" and affirmed the financial strength rating of C (Weak) of United Automobile Insurance Company (United Auto) (Miami Gardens, FL). The outlook for both ratings has been revised to stable from negative.
The upgrading of the ICR reflects United Auto's recently improved risk-adjusted capitalization, refined underwriting approach and management's local market knowledge. The considerably improved operating results since 2013 have been driven by reduced personal injury protection (PIP) loss activity as a result of the new PIP reform, rate increases, improved claims management and tighter underwriting controls outside of Florida.
These positive rating factors are somewhat offset by United Auto's elevated underwriting leverage and volatile underwriting performance over recent years. These factors contributed to the marginal level of risk-adjusted capitalization that developed in most years. Furthermore, United Auto's limited product and geographic concentration has exposed the company to unfavorable judicial actions and regulatory concerns.
Future positive rating actions may result from United Auto's improved operating trends, along with its strengthened risk-adjusted capitalization. However, negative rating actions could result if underwriting performance falls materially short of A.M. Best's expectations or there is a significant erosion of capital.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.