AM Best has downgraded the Long-Term Issuer Credit Ratings to “a” from “a+” and affirmed the Financial Strength Rating of A (Excellent) of California Insurance Company (Foster City, CA), Continental Indemnity Company (Cedar Rapids, IA), Illinois Insurance Company (Cedar Rapids, IA), Texas Insurance Company (Dallas, TX) and Pennsylvania Insurance Company (Cedar Rapids, IA). In addition, AM Best has maintained the under review with negative implications status on these Credit Ratings (ratings). All companies are collectively referred to as North American Casualty Group (NAC).
The ratings reflect NAC’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
The ratings have been downgraded following the close of the sale of Applied Underwriters Holding Company Inc. by Berkshire Hathaway Inc. [NYSE: BRK.A and BRK.B], which has resulted in NAC now being wholly owned by its founder, Steve Menzies. The rating downgrades reflect the weakening in the companies’ financial flexibility due to this change in ownership. The ratings will remain under review with negative implications pending further discussions with management. AM Best will continue to monitor NAC’s rating fundamentals as well as the potential impact stemming from the ongoing controversy between the company and the California Department of Insurance.
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.
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Senior Financial Analyst
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