A.M. Best Affirms Ratings of Members of Donegal Insurance Group and Donegal Group Inc.
October 07 2014 - 9:42AM
Business Wire
A.M. Best has affirmed the financial strength rating
(FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a”
of the members of the Donegal Insurance Group (Donegal
Group) (Marietta, PA). In addition, A.M. Best has affirmed the FSR
of A (Excellent) and the ICR of “a” for the newly added Donegal
Group member, Michigan Insurance Company (MICO) (Grand
Rapids, MI). Concurrently, A.M. Best has affirmed the ICR of “bbb”
of the publicly traded holding company, Donegal Group Inc.
(Delaware) [NASDAQ: DGICA and DGICB]. The outlook for all ratings
is stable. (See below for a detailed listing of the member
companies.)
The affirmation of the ratings of the Donegal Group members is
based on supportive risk-adjusted capitalization, sound balance
sheet liquidity, generally positive earnings and good business
profile, which includes geographic and product line
diversification, effective use of technology in the independent
agency distribution channel and a history of successful expansion
through strategic acquisitions and affiliations. Although the
individual members within the Donegal Group, including MICO, play a
specific role in the organization’s overall business plan and their
operating performances may vary, each contribute favorably to the
group’s risk-adjusted capitalization. In addition, each of the
members support the corporate business strategy and benefit from
shared senior management, intercompany reinsurance and the added
financial flexibility of Donegal Group Inc. to raise capital
through debt or equity offerings during favorable investment
markets.
These positive rating factors are offset in part by the
organization’s overall less favorable operating performance over
the last five years and a slightly higher expense structure.
Operating performance in recent years has been adversely impacted
by more frequent and severe weather events. However, A.M. Best
continues to look favorably upon the actions being taken by
management to improve operating performance through rate increases,
stronger underwriting standards and use of enterprise risk
management.
The affirmation of the ICR of Donegal Group Inc. recognizes the
overall financial strength of its property/casualty insurance
operation, its moderate amount of financial leverage and the
subordination of its creditors to the insurance companies’
policyholders.
While the ratings of Donegal Group's members are stable, future
positive rating actions may result should a trend toward sustained
underwriting profitability develop. However, negative rating
actions could result should the group's underwriting and operating
performance fall markedly short of A.M. Best's expectations or if
there is a significant weakening of its overall risk-adjusted
capitalization.
The FSR of A (Excellent) and the ICRs of “a” have been affirmed
for the following members of Donegal Insurance Group:
· Atlantic States Insurance Company
· Donegal Mutual Insurance Company
· Le Mars Insurance Company
· Michigan Insurance Company
· The Peninsula Insurance Company
· Peninsula Indemnity Company
· Sheboygan Falls Insurance Company
· Southern Insurance Company of Virginia
· Southern Mutual Insurance Company
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.
Key insurance criteria reports utilized:
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance
Companies
• The Treatment of Terrorism Risk in the Rating Evaluation
• Insurance Holding Company and Debt Ratings
• Analyzing Insurance Holding Company Liquidity
• Catastrophe Analysis in A.M. Best Ratings
• Equity Credit for Hybrid Securities
• Understanding BCAR for Property/Casualty Insurers
A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
A.M. BestJacqalene LentzSenior Financial
Analyst908-439-2200, ext.
5762jacqalene.lentz@ambest.comorGreg
WilliamsAssistant Vice President908-439-2200, ext.
5815greg.williams@ambest.comorChristopher
SharkeyManager, Public Relations908-439-2200, ext.
5159christopher.sharkey@ambest.comorJim
PeavyAssistant Vice President, Public
Relations908-439-2200, ext.
5644james.peavy@ambest.com
Donegal (NASDAQ:DGICA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Donegal (NASDAQ:DGICA)
Historical Stock Chart
From Apr 2023 to Apr 2024