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AM Best confirms credit ratings of The Allstate Corporation and its principal subsidiaries

By on August 11, 2022 0

OLDWICK, NJ–(BUSINESS WIRE)–AM Best Affirmed Financial Strength Rating (FSR) of A+ (Superior) and Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” (Superior) for members of Allstate Insurance Group (Allstate). In addition, AM Best has confirmed FSR of A (Excellent) and long-term ICRs of “a” (Excellent) for members of Allstate New Jersey Insurance Group (collectively Allstate New Jersey) (headquarters in Bridgewater, NJ ) and First Colonial Insurance Company (FCIC) (headquarters in Jacksonville, Florida). At the same time, AM Best confirmed the FSR of A- (Excellent) and the long-term ICR of “a-” (Excellent) of ASMI Auto group members. AM Best also confirmed the FSR of B+ (good) and the long-term KPIs of “bbb-” (good) of the members of Castle Key Group (Castle Key).

At the same time, AM Best confirmed the FSR of A+ (superior) and the long-term ICR of “aa” (superior) of American Heritage Life Insurance Company (American Heritage) (Jacksonville, FL), Direct General Life Insurance Company (Orangeburg , SC) and National Health Insurance Company (Dallas, TX). At the same time, AM Best affirmed the long-term ICR of “a” (Excellent) and all existing long-term and short-term issue credit ratings (long-term IR; short-term IR) of the ultimate parent company, The Allstate Corporation (Allcorp). AM Best also confirmed the long-term ICR of “a” (Excellent) and the long-term IRs of National General Holdings Corp. (Delaware), an intermediary holding company of Allcorp. The outlook for these Credit Ratings (ratings) is stable. All companies named above are headquartered in Northbrook, IL, unless otherwise noted. (See the link below for a detailed list of companies and ratings.)

Allstate’s ratings reflect the strength of its balance sheet, which AM Best rates as the strongest, as well as its strong operational performance, favorable business profile and very strong enterprise risk management (ERM).

The Allstate Group’s favorable market position in the passenger car and homeowner markets, along with its strong geographic reach and distribution capabilities are the foundations of its historically profitable operations and favorable risk-adjusted capitalization, such as measured by Best’s capital adequacy ratio (BCAR). Allstate’s profitable growth trend is supported by its underwriting expertise and proactive pricing actions, as well as its continued spending efficiency. Allstate’s approach to innovation across its operations is a driver of its competitive success in its core industries. The divestment of its life and annuity operations improved capitalization and management demonstrated its focus on its long-term growth strategy, improving scale and overall diversification. However, despite Allstate’s very strong risk management practices and strong reinsurance program, the company remains inherently exposed to natural disasters in the United States. Additionally, the automotive industry has experienced a significant increase in claims repair costs over the past 12 months, leading the organization to significantly increase reserves from the prior year, impacting second quarter results in 2022. AM Best notes that Allcorp maintains strong financial flexibility through its access to capital markets and various other sources of liquidity. The organization’s leverage and hedging parameters are in line with its peers and more than adequate for its current ratings.

Allstate New Jersey’s ratings reflect the strength of its balance sheet, which AM Best rates as very strong, as well as its strong operating performance, limited business profile and appropriate ERM. Additionally, the ratings recognize the financial strength, ERM and continued support of Allstate Insurance Company and Allcorp. The company’s risk-adjusted capitalization remains at the highest level, as measured by BCAR, mainly due to its profitable operating performance and strong management capabilities. However, the concentration of the group’s operations in a single state creates significant exposure to local market disruptions and the potential for localized weather disasters. The ratings also reflect AM Best’s expectations that trends in capitalization and operating performance will continue in the short to medium term.

FCIC’s ratings reflect the strength of its balance sheet, which AM Best rates as very strong, as well as its marginal operating performance, neutral business profile and appropriate ERM. FCIC’s ratings also benefit from the explicit and implicit support provided by Allcorp, its ultimate parent company. As a subsidiary of Allcorp, FCIC benefits from its extensive market presence and brand recognition. FCIC’s very strong balance sheet is based on its highest level of risk-adjusted capitalization, as measured by BCAR, and its efficiently managed investment portfolio. The company’s marginal operating performance reflects historical volatility and improving underwriting earnings trends related to certain lines of business. AM Best notes that the company continues to supplement its core product revenue with a suite of ancillary product offerings and commission revenue from affiliates within the Allstate Dealer Services group.

Castle Key’s ratings reflect the strength of its balance sheet, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate ERM. Castle Key’s risk-adjusted capital, as measured by BCAR, is currently strong, reflecting the growth of its business. AM Best notes that the company’s limited business profile primarily reflects its geographic concentration of property and casualty insurance business written in Florida. As a result, Castle Key maintains a significant exposure to hurricanes, with a corresponding substantial reliance on catastrophe reinsurance. The company has shown operating profitability and an accumulation of surpluses over the past few years despite periodic losses caused by disasters caused by weather-related events.

American Heritage’s ratings reflect the strength of its balance sheet, which AM Best rates as very strong, as well as its strong operational performance, neutral business profile and very strong ERM. The company’s balance sheet is anchored by its very high level of risk-adjusted capitalization, as well as its favorable liquidity and the overall growth in surpluses recorded in recent years. American Heritage markets Allstate’s workplace benefits business to all market segments, including small, medium and large businesses. Although the company continues to report generally favorable sales growth and new premiums, the employee benefits market remains highly competitive and could challenge revenue growth in the future.

The ratings reflect ASMI Auto Group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operational performance, very limited business profile and appropriate management of business risks. The ratings also reflect risk management and service agreement support from its ultimate parent, Allcorp. The ASMI Auto group’s risk-adjusted capitalization remains at a very high level, as measured by BCAR, and the group’s prudent investment allocation and adequate liquidity measures further support the overall balance sheet valuation. ASMI Auto Group’s very limited business profile reflects its liquidation nature, as it was created to house certain inactive Michigan auto policies with active injury claims that account for the majority of Allcorp’s Michigan Catastrophic Claims Association recoveries. . As expected, operating performance continues to be driven primarily by net investment income and will continue to be modestly profitable.

The ratings of Direct General Life Insurance Company and National Health Insurance Company reflect the strength of their balance sheets, which AM Best rates as the strongest, as well as their adequate operating performance, neutral business profile and very strong ERM .

A complete list FSRs, long-term ICRs, and long-term and short-term IRs of The Allstate Corporation and its P/C and life/health subsidiaries are available.

This press release relates to credit ratings that have been published on AM Best’s website. For all ratings information relating to the release and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limitations of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s Credit Scores, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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