A.M. Best Affirms Credit Ratings of Members of Donegal Insurance Group and Donegal Group Inc.
February 21 2018 - 10:25AM
Business Wire
A.M. Best has affirmed the Financial Strength Rating
(FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings
(Long-Term ICR) of “a” of the members of the Donegal Insurance
Group (Donegal Group). Concurrently, A.M. Best has affirmed the
Long-Term ICR of “bbb” of the publicly traded holding company,
Donegal Group Inc. (Delaware) (NASDAQ: DGICA and DGICB). The
outlook of these Credit Ratings (ratings) is stable. (See below for
a detailed listing of the member companies.)
The ratings reflect Donegal Group’s balance sheet strength,
which A.M. Best categorizes as very strong, as well as its adequate
operating performance, neutral business profile and appropriate
enterprise risk management (ERM).
Donegal Group’s capital assessment reflects its Best’s Capital
Adequacy Ratio (BCAR), which A.M. Best categorizes as strongest,
and sound liquidity position, which are offset partially by
increasing underwriting leverage and modestly adverse loss reserve
development in recent years. Although the individual members within
the Donegal Group play a specific role in the organization’s
overall business plan and their operating performances may vary,
each contributes favorably to the group’s risk-adjusted
capitalization. In addition, each member supports the corporate
business strategy and benefits 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.
Adequate operating performance has been demonstrated by a
five-year average combined ratio, which compares favorably with the
industry composite average, solid premium growth and positive
pre-tax operating earnings each year over the recent five-year
period. Partially offsetting these positive rating factors has been
some underwriting volatility in recent years, driven by 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 and more refined
underwriting standards.
Donegal Group’s neutral business profile 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.
Appropriate ERM is demonstrated through a formal risk management
process, which provides assurances the organization’s key
compliance, financial, strategic and operational risks are
addressed in meeting organizational objectives.
The affirmation of the Long-Term 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.
The FSR of A (Excellent) and the Long Term 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
- Mountain States Commercial Insurance
Company
- Mountain States Indemnity
Company
- Peninsula Indemnity Company
- Peninsula Insurance Company
- Sheboygan Falls Insurance
Company
- Southern Insurance Company of
Virginia
- Southern Mutual Insurance
Company
This press release relates to Credit Ratings 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 © 2018 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20180221005871/en/
A.M. BestKenneth Tappen, +1 908-439-2200, ext.
5248Senior Financial
Analystkenneth.tappen@ambest.comorRichard Attanasio, +1
908-439-2200, ext. 5432Senior
Directorrichard.attanasio@ambest.comorChristopher Sharkey,
+1 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy, +1
908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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