AM Best Affirms Credit Ratings of The National Security Group, Inc. & Its Subsidiaries; Upgrades Credit Ratings for Life/Heal...
April 11 2019 - 4:21PM
Business Wire
AM Best has affirmed the Financial Strength Rating (FSR)
of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term
ICR) of “bbb” of National Security Fire and Casualty Company
(NSFC). In addition, AM Best has affirmed the FSR of B+ (Good) and
Long-Term ICR of “bbb-” of NSFC’s wholly owned subsidiary, Omega
One Insurance Company, Inc. (Omega). Concurrently, AM Best has
affirmed the Long-Term ICR of “bb” of The National Security Group,
Inc. (NSGI) (Wilmington, DE) [NASDAQ: NSEC], the parent holding
company. The outlook of these Credit Ratings (ratings) is
stable.
AM Best also has upgraded the FSR to B++ (Good) from B+ (Good)
and Long-Term ICR to “bbb” from “bbb-” of NSFC’s affiliated
life/health insurer, National Security Insurance Company (NSIC).
The outlook of the ratings has been revised to stable from
positive. All companies are domiciled in Elba, AL, unless otherwise
specified.
The ratings of NSFC reflect the company’s balance sheet
strength, which AM Best categorizes as very strong, as well as its
marginal operating performance, limited business profile and
appropriate enterprise risk management (ERM). These assessments are
based on the consolidation of NSFC and Omega. AM Best assesses
NSFC’s risk-adjusted capitalization, based on Best’s Capital
Adequacy Ratio (BCAR), at the strongest level; however, balance
sheet strength is diminished by a surplus note issued by Omega One,
debt at the holding company and volatility in surplus growth due to
inconsistent underwriting performance. Debt leverage at NSGI has
been improving as a result of the retirement of debt. The publicly
traded parent also provides an added degree of financial
flexibility.
AM Best considers NSFC’s operating performance to be marginal
due to underwriting volatility and below-average overall earnings,
which is primarily attributed to catastrophic weather events and
weak investment markets. NSFC’s business profile is viewed as
limited, and with its geographic concentration as a property
insurer in the southeastern United States, the company’s earnings
will remain susceptible to the effects of frequent and severe
weather-related events. An experienced management team is
addressing these challenges with an ERM approach that identifies
and manages all risks as disclosed in NSGI’s annual public
filings.
The ratings of Omega reflect its balance sheet strength, which
AM Best categorizes as strong, as well as its marginal operating
performance, very limited business profile and appropriate ERM.
Currently, Omega’s sole purpose is to provide limited catastrophe
loss coverage to NSFC, and its earnings could be negatively
impacted if severe weather events breach the level of reinsurance
cover Omega provides to NSFC.
The ratings of NSIC reflect its balance sheet strength, which AM
Best categorizes as strong, as well as its adequate operating
performance, limited business profile and appropriate ERM. NSIC’s
balance sheet strength assessment was revised upward to strong from
adequate, due to continued capital growth trends sourced from net
earnings, combined with diminished future debt-service demands at
NSGI.
This press release relates to Credit Ratings that have been
published on AM 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 AM 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 AM
Best press releases, please view Guide for Media - Proper
Use of Best’s Credit Ratings and AM Best Rating Action Press
Releases.
AM Best is a global rating agency and information provider
with a unique focus on the insurance industry. Visit
www.ambest.com for more information.
Copyright © 2019 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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version on businesswire.com: https://www.businesswire.com/news/home/20190411005859/en/
Ricardo LongchallonSenior Financial Analyst –
P/C+1 908 439 2200, ext.
5676ricardo.longchallon@ambest.comRichard
FrancisSenior Financial Analyst – L/H+1 908 439 2200,
ext. 5152richard.francis@ambest.comChristopher
SharkeyManager, Public Relations+1 908 439 2200, ext.
5159christopher.sharkey@ambest.comJim PeavyDirector,
Public Relations+1 908 439 2200, ext.
5644james.peavy@ambest.com
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