A.M. Best has affirmed the financial strength rating
(FSR) of A++ (Superior) and the issuer credit ratings (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 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 ICR and senior issue
ratings 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 issue
ratings guaranteed by TRV and TRV’s indicative issue ratings have
also been affirmed. The outlook for each of the above ratings is
stable.
A.M. Best also has affirmed the FSR of A (Excellent) and the ICR
of “a” of The Dominion of Canada General Insurance Company
(Dominion) (Toronto Ontario, Canada). The outlook for each of these
ratings is stable.
A.M. Best also has affirmed the FSR of A (Excellent) and the ICR
of “a+” of The Premier Insurance Company of Massachusetts
(Premier) (Hartford, CT) and the FSR of A- (Excellent) and the ICR
of “a-” of First Floridian Auto and Home Insurance Company
(First Floridian) (Tampa, FL). The outlook for each of these
ratings is stable. (Please see link below for a detailed listing of
the companies and ratings.)
The rating affirmations reflect Travelers’ 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. Despite significant share repurchases
since 2006, TRV maintained $1.7 billion of cash and marketable
securities, and its adjusted debt-to-capital ratio, excluding
accumulated other comprehensive income (AOCI), remained moderate at
21.1% at March 31, 2016. The ratio of adjusted debt-to-tangible
capital (excluding AOCI) ratio was 24.2%, well within A.M. Best’s
expectations at the current rating level, as was interest
coverage.
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. More recently, the group
produced strong results in the first quarter of 2016, even as
catastrophe losses increased substantially from the prior year.
Expense reductions and the implementation of the Quantum 2.0
underwriting system have driven recent growth in personal auto.
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 Travelers Insurance Company of Canada (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 driven by legacy issues within
its Ontario auto business, which pre-date current ownership. An
adverse development cover that the company entered into in
connection with the Dominion acquisition should mitigate future
variability related to those legacy issues. Additional offsetting
factors include recent increased competition and continued lower
investment yields.
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.
The ratings of First Floridian recognize its strong
risk-adjusted capitalization, trend of highly profitable operating
results in recent years, 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.
Partially offsetting these strengths are First Floridian’s
continued, albeit declining, exposure to catastrophe losses and
single state geographic concentration in Florida.
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
similarly-rated peers, 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, ICRs and issue ratings, 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.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating
Services, Inc. ALL RIGHTS RESERVED.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160722005536/en/
A.M. BestMichael Russo, +1 908-439-2200, ext. 5372Senior
Financial Analystmichael.russo@ambest.comorJennifer
Marshall, +1 908-439-2200, ext. 5327Assistant Vice
Presidentjennifer.marshall@ambest.comorChristopher
Sharkey, +1 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
+1 908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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