Company Website:
http://www.ambest.com
OLDWICK, N.J. -- (Business Wire)
A.M. Best has affirmed the Financial Strength Rating (FSR) of A++
(Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of
“aa+” of the property/casualty subsidiaries of The Travelers
Companies, Inc. (TRV) (headquartered in New York, NY) [NYSE:TRV],
collectively known as Travelers Group (Travelers). In addition,
A.M. Best has also affirmed the FSR of A++ (Superior) and the Long-Term
ICR of “aa+” of Travelers Casualty and Surety Company of America
(TCSA) (Hartford, CT), and TCSA’s affiliates, Travelers Casualty and
Surety Company of Europe Limited (TCSCE) (United Kingdom) and Travelers
Insurance Company of Canada (TICC) (Ontario).
Concurrently, A.M. Best has affirmed the Long-Term ICR and senior
Long-Term Issue Credit Ratings (Long-Term IR) of “a+” of TRV and its two
wholly owned downstream holding companies, Travelers Property
Casualty Corp. and Travelers Insurance Group Holdings Inc.
(both headquartered in Hartford, CT). All outstanding securities issued
by the two downstream holding companies are guaranteed by TRV. All other
Long-Term IR and Short-Term Issue Credit Rating (Short-Term IR)
guaranteed by TRV and TRV’s indicative Long-Term IRs have also been
affirmed. The outlook of each of the above Credit Ratings (ratings) is
stable.
A.M. Best also has affirmed the FSR of A (Excellent) and the Long-Term
ICR of “a” of The Dominion of Canada General Insurance Company (Dominion)
(Toronto Ontario, Canada). The outlook of each of these ratings is
stable.
A.M. Best also has affirmed the FSR of A- (Excellent) and the Long-Term
ICR of “a-” of First Floridian Auto and Home Insurance Company
(First Floridian) (Tampa, FL). The outlook of these ratings is stable.
(Please see link below for a detailed listing of the companies and
ratings.)
Additionally, A.M. Best also has affirmed the FSR of A (Excellent) and
the Long-Term ICR of “a+” of The Premier Insurance Company of
Massachusetts (Premier) (Hartford, CT) with a stable outlook. A.M.
Best has concurrently withdrawn its ratings for Premier, as the company
has requested to no longer participate in A.M. Best’s interactive rating
process.
The rating affirmations of Travelers reflect the group’s solid
risk-adjusted capitalization, trend of favorable operating and
underwriting results, excellent market profile in commercial and
personal lines (largely distributed through independent agents) and
effective management team. The ratings also acknowledge Travelers’
proactive and comprehensive risk management, underwriting and financial
discipline, relatively conservative investment portfolio, geographic and
product diversification, and enhanced technology and internal
information systems, which have improved its underwriting effectiveness
and ability to service agents and customers in both commercial and
personal lines. In addition, Travelers’ superior product breadth,
industry leading data and analytics and leading position within its
distribution network have enabled it to report a trend of strong
earnings that have outperformed the majority of its peers over time.
Travelers’ ratings also consider the financial flexibility and liquidity
provided by TRV. TRV held $2.5 billion of liquid funds at June 30, 2017,
$490 million of which was used in the August 2017 acquisition of Simply
Business, with a further $450 million earmarked to fund a December 2017
debt maturity. Substantial remaining excess liquidity is net of sizable
common stock repurchases over the past several years. TRV’s
debt-to-capital ratio at June 30, 2017 remained modest at 22.5%.
Adjusting for tangible capital, the debt-to-tangible capital ratio is
25.7%, well within A.M. Best's expectation for the current rating
levels. Interest coverage also remained strong through 2016 at 12.0
times. Due to higher catastrophe losses in 2017, A.M. Best expects
interest coverage to decline in 2017 but remain in the high single
digits, which remains supportive of the current “a+” rating.
Offsetting these positive rating factors are the ongoing competitive
environment within the property/casualty markets, Travelers’ relatively
significant exposure to natural and man-made catastrophes and challenges
in its personal auto business. Travelers has comprehensive reinsurance
and risk management programs in place to manage its spread of risk and
limit its overall exposure. Despite reporting an increased level of
catastrophe losses in 2011 and 2012, Travelers reported solid returns in
those years while maintaining strong liquidity and risk-adjusted
capitalization, demonstrating the group’s conservative operating
philosophy, strong business profile and comprehensive risk management
program. A.M. Best expects that this will also be the case in 2017, when
earnings will be pressured by catastrophe losses related to Hurricanes
Harvey, Irma, and Maria. Expense reductions and the implementation of
the Quantum 2.0 underwriting system have driven recent growth in
personal auto.
A.M. Best expects that the losses incurred by Travelers following the
recent catastrophic events, including Hurricanes Harvey, Irma and Maria
and recent seismic activity in Mexico, will be contained within the
organization’s risk tolerances, although these will, as noted above,
have a negative impact on earnings for the year. A.M. Best will monitor
Travelers’ loss activity associated with these events and will update
its assessment of Travelers’ risk management capabilities and ratings
should there be a material deviation from expectations.
The ratings of TCSA and its 100% reinsured affiliate, TCSCE, primarily
recognize the companies’ strong consolidated risk-adjusted
capitalization, specialized underwriting expertise, highly favorable
underwriting and operating performance and leadership position in the
surety, fidelity and management liability segments. These strengths are
partially offset by TCSA’s limited product diversification, as well as
the negative impact that continued competitive property/casualty markets
and challenging macroeconomic conditions may have on premium and
profitability levels.
The ratings of TICC reflect its superior risk-adjusted capitalization,
favorable underwriting and operating profitability, excellent brand
recognition, strong profile as a leading specialty lines writer in the
surety and corporate management liability segments, as well as the
implicit and explicit support received from its direct parent, TCSA, as
well as its ultimate parent, TRV. Partially offsetting these positive
rating factors are continued soft market conditions and its relatively
elevated expense ratio due, in part, to investments in technology.
The ratings of Dominion reflect its solid risk-adjusted capitalization;
excellent brand recognition; established nationwide Canadian market
presence, with a focus in Ontario; and the implicit and explicit support
it receives from its parent, TRV. Partially offsetting these positive
rating factors is the company’s fluctuating operating performance, which
was impacted in 2016 by catastrophe losses. Additional offsetting
factors include recent increased competition and continued lower
investment yields.
The ratings of First Floridian recognize its strong risk-adjusted
capitalization, operating efficiencies and local market focus, which
enables it to respond effectively to issues associated with Florida’s
personal lines market, and the additional operational support and
financial flexibility afforded by TRV. The company has generated strong
operating results during the recent five- and 10-year periods as
evidenced by its average pre-tax and total return measures. However,
this strong performance coincided with a period during which no
significant hurricanes made landfall in Florida.
Partially offsetting these strengths are First Floridian’s continued,
albeit declining, exposure to catastrophe losses and single state
geographic concentration in Florida. The company's underwriting
performance is expected to deteriorate sharply in 2017, due to losses
from Hurricane Irma, which impacted Florida in the third quarter of
2017. A.M. nevertheless expects First Floridian’s risk-adjusted
capitalization to remain strongly supportive of its ratings.
The ratings of Premier acknowledge its strong risk-adjusted
capitalization, historically favorable operating profitability and the
additional operational support and financial flexibility afforded by
Travelers and TRV. These positive rating factors are partly offset by
Premier’s underwriting losses earlier in most recent five-year period
and the concentration of its business in a single state and line of
business, specifically, Massachusetts private passenger automobile. As
noted above, the company has been placed into run-off and its ratings
have been withdrawn concurrent with the affirmation.
Positive rating movement is unlikely in the near term. Factors that
could lead to negative rating actions include deterioration in
underwriting and operating performance to a level below A.M. Best’s
expectations, an erosion of surplus that causes a decline in
risk-adjusted capital to a level that is no longer supportive of the
current ratings or a deterioration in TRV’s overall financial strength
or credit quality.
For a complete listing of The Travelers Companies, Inc.’s FSRs,
Long-Term ICRs, Long-Term IRs and Short-Term IRs, please visit The
Travelers Companies, Inc.
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. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and A.M. Best press releases, please view Guide
for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating
Action Press Releases.
A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating Services, Inc. and/or its
subsidiaries. ALL RIGHTS RESERVED.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171005006291/en/
Contacts:
A.M. Best
Greg Dickerson, 908-439-2200, ext. 5161
Senior
Financial Analyst
gregory.dickerson@ambest.com
or
Christopher
Sharkey, 908-439-2200, ext. 5159
Manager, Public Relations
christopher.sharkey@ambest.com
or
Jennifer
Marshall, 908-439-2200, ext. 5327
Director
jennifer.marshall@ambest.com
or
Jim
Peavy, 908-439-2200, ext. 5644
Director, Public Relations
james.peavy@ambest.com
Source: A.M. Best
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