Company cites challenging macroeconomic trends for the changes
AM Best has taken a number of credit rating actions affecting Allstate and its subsidiaries, citing various factors impacting their financial positions and operating performances.
The Long-Term Issuer Credit Rating (Long-Term ICR) of the members of Allstate Insurance Group was downgraded to “aa-” (Superior) from “aa” (Superior). However, the Financial Strength Rating (FSR) of A+ (Superior) was affirmed.
In a press release, AM Best said the actions were driven by challenging macroeconomic trends impacting underwriting results and risk-adjusted capitalization, including higher-than-expected loss cost trends in personal auto insurance and elevated catastrophe losses in the homeowners’ line of business.
“AM Best expects that Allstate’s underwriting and operational expertise, significant pricing actions and ongoing expense efficiencies will lead to an improvement in operating results,” the release stated.
“In addition, the company’s recently announced suspension of its share repurchase program is expected to have a positive impact on capital generation capabilities. However, despite Allstate’s sophisticated risk management practices and robust reinsurance program, the company remains inherently exposed to natural disasters occurring throughout the United States.”
Castle Key Group
AM Best removed negative implications and downgraded the FSR of Castle Key to “B” (Fair) from “B+” (Good). The Long-Term ICR was downgraded to “bb” (Fair) from “bbb-” (Good), with a stable outlook.
According to the agency, the downgrade reflects a decline in surplus due to challenging conditions in the Florida personal property insurance market, including higher loss severity, catastrophe-related losses, and increased reinsurance costs.
American Heritage Life Insurance Company
Long-Term ICR was downgraded to “aa-” (Superior) from “aa” (Superior). However, the FSR of A+ (Superior) was affirmed, with a stable outlook.
AM Best said the company is continuing to perform well in the competitive employee benefits market, maintaining strong returns and loss ratios in line with expectations.
The Allstate Corporation
AM Best downgraded the Long-Term ICR to “a-” (Excellent) from “a” (Excellent), and all existing Long-and Short-Term Issue Credit Ratings, for the ultimate parent company, with the outlook for these ratings remaining stable.
The agency said this action is in line with the downgrades of its subsidiaries and reflects the negative impact of challenging macroeconomic trends on underwriting results and risk-adjusted capitalization.
National General Holdings Corp., ASMI Auto Group, and First Colonial Insurance Company
AM Best downgraded the Long-Term ICR for National General Holdings Corp. to “a-” (Excellent) from “a” (Excellent), while affirming the FSR and Long-Term ICR of ASMI Auto Group and First Colonial Insurance Company, with stable outlooks.
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