CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 09, 2008 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating (FSR) to A- (Excellent) from B++ (Good) and issuer credit ratings (ICR) to "a-" from "bbb+" for Civil Service Employees Group (Civil Service) (San Francisco, CA) and its members. The outlook for all ratings is stable. (See below for a detailed list of the companies and ratings.)
The rating upgrades are based on Civil Service's improved risk-adjusted capitalization, favorable operating performance and market niche as a writer of personal lines products for civil service employees and affinity groups. Partially offsetting these positive rating factors are Civil Service's business concentration within primarily one state, high gross catastrophe leverage and modestly above average underwriting leverage.
Civil Service's positive rating factors are derived from management's knowledge of its California operating territories, high business persistency, conservative investment risk profile and favorable loss reserve development. Management has implemented a number of strategic initiatives over the previous five-year period to improve overall earnings, which included rate adjustments, stricter underwriting guidelines, improved claims handling and non-renewals or moratoriums on unprofitable lines of business. These initiatives, along with favorable automobile loss frequency trends, a lack of significant homeowner catastrophe activity and increased investment income have resulted in significantly improved operating earnings.
Civil Service's negative rating factors include a business concentration within California, which exposes it to market dislocations, legislative and judicial changes and catastrophe events. In addition, while Civil Service's gross catastrophe leverage from a 250-year "fire following" earthquake remains high, as depicted in a probable maximum loss (PML) analysis, the net PML has been reduced to a moderate level through a comprehensive catastrophe reinsurance program. Furthermore, Civil Service maintains modestly above average gross and net underwriting leverage relative to industry composite norms, driven by slightly above average net premiums written, net liabilities and ceded reinsurance leverage.
The FSR has been upgraded to A- (Excellent) from B++ (Good) and the ICRs have been upgraded to "a-" from "bbb+" for Civil Service Employees Group and its following members:
- Civil Service Employees Insurance Company
- CSE Safeguard Insurance Company
For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.
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.