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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 30, 2013 12:00 AM (EDT)
A.M. Best Co. has removed from under review with developing implications and affirmed the financial strength rating of B- (Fair) and issuer credit rating of “bb-” of Dallas National Insurance Company (Dallas National) (Dallas TX). The outlook assigned to both ratings is stable.
The rating actions reflect the closure of the acquisition of Dallas National by Lonestar Holdco LLC, a direct subsidiary of Southport Lane L.P. The ratings also recognize Dallas National’s poor underwriting performance in recent years, most notably in 2011 and 2012, primarily driven by sizable adverse loss reserve development, as well as its historically high cost structure and vulnerable risk-adjusted capitalization.
These factors are somewhat offset by Dallas National’s improved risk-adjusted capitalization due to capital contributions from the new owner, its generally favorable operating performance prior to 2009 and the financial flexibility provided by Lonestar Holdco LLC.
Positive rating actions are not expected in the near term. Factors that could lead to negative rating actions include a deterioration in Dallas National’s underwriting performance and/or a sizable erosion of its risk-adjusted capitalization.
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.
A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.