AM Best confirmed the financial strength rating of A- (excellent) and the long-term issuer credit rating of âa-â (excellent) of
The ratings reflect the strength of NH P & C’s balance sheet, which AM Best believes to be strong, as well as its adequate operational performance, limited business profile and appropriate management of business risks. The ratings also reflect the implicit and explicit support the company receives from its ultimate parent, the
NH P & C’s risk-adjusted capitalization is considered very strong, as measured by Best’s capital adequacy ratio (BCAR). Although its capital is sensitive to moderate volatility caused by the recent surge in long-term investment returns, NH P & C’s capital and surplus have increased in 2020 and the first nine months of 2021 due to a strong expansion in retained earnings. NH P&C has maintained a zero dividend policy since 2017 to strengthen its capitalization in view of IFRS 17 and K-ICS, a new solvency regime that will be implemented in
NH P & C’s operating performance is considered adequate with a five-year (2016-2020) average operating ratio of 98.2% and a return on equity ratio of 3.3%. The company recorded favorable underwriting performance in 2020, mainly due to improved claims experience and robust premium growth in the long-term line of insurance, coupled with an improved expense ratio. AM Best notes that the underwriting fundamentals of fast growing government policy insurance products, which reported significant losses due to abnormal weather conditions in 2018 and 2019, have shown signs of improvement since 2020, following the efforts. of the company such as underwriting strengthening, product restructuring and rate hikes.
NH P&C is a wholly owned subsidiary of
NH P&C is strategically important to its ultimate parent company, NACF, due to its role as the exclusive provider of state policy insurance to members of the NACF cooperative. The improved rating reflects the operational and financial benefits that NH P&C derives from being a key member within the NACF, including government reinsurance grants and support for government insurance policies, l ‘exclusive access to the NACF cooperative channel and capital support from its immediate parent company, NHFG.
Negative rating actions could arise in the event of a significant deterioration in the company’s risk-adjusted capitalization. Negative rating actions may also arise if the level of support or the strategic importance of the business to its ultimate parent company is reduced to a degree that no longer supports the current level of improvement.
Ratings are communicated to rated entities before their publication. Unless otherwise indicated, the ratings have not been changed as a result of this communication.
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Source: AM Best