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FOR IMMEDIATE RELEASE
OLDWICK - JUNE 24, 2016 09:41 AM (EDT)
A.M. Best has downgraded the financial strength rating (FSR) to C++ (Marginal) from B- (Fair) and the issuer credit rating (ICR) to “b+” from “bb-” of Unique Insurance Company (Unique) (Chicago, IL). The outlook for the FSR has been revised to stable from negative, while the outlook for the ICR remains negative.
The rating downgrades reflect the continued deterioration of Unique’s overall risk-adjusted capitalization. While net premium written decreased by year-end 2015, this was due to an increase in the company’s quota share agreement, as gross writings and policy count continued to increase approximately 25% compared with the prior year. As a result of the growth, incurred losses increased and loss reserves continued to develop unfavorably. When compared with other private passenger non-standard automobile writers, all of Unique’s leverage measures are elevated. The company’s high expense position, driven by commission costs, also contributes negatively to the company’s profitability.
Partially offsetting these negative rating factors are Unique’s generally positive operating results. In each of the past five years, the company has generated positive net income and positive pre-tax and total returns on revenue and equity. The company’s average pure loss ratio compares favorably with the industry composite. Unique has added to surplus in each of the past four years due to a combination of investment income and fee income that offsets overall underwriting losses. Nevertheless, overall risk-adjusted capitalization has trended downward due to the aforementioned growth.
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page.
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