A.M. Best has revealed that it had reduced the financial strength ratings (FSR) and issuer credit ratings (ICR) of member companies associated with CSAA Insurance Group.
The CSAA members affected by the reductions are CSAA Insurance Exchange (Walnut Creek, CA), CSAA Affinity Insurance Company (Glendale, AZ), CSAA General Insurance Company (Indianapolis, IN), CSAA Mid-Atlantic Insurance Company of New Jersey (Hamilton, NJ), CSAA Mid-Atlantic Insurance Company (Glendale, AZ) and CSAA Fire & Casualty Insurance Company (Indianapolis, IN).
Each member’s FSR went from “A+” (Superior) to “A” (Excellent), and ICR from “aa-” to “a+“. Moreover, the outlook for each of these ratings has been revised from negative to stable.
According to A.M. Best, the downgrade reflects deterioration in the insurance group’s underwriting results over a number of consecutive years. Notably, CSAA had posted sizable losses since 2013. The insurance group’s underwriting results were severely affected by increased auto claims frequency, particularly in California—where bodily injury and collision losses have increased. The group’s results in 2015 were also adversely influenced by wildfires in California during that period. Altogether, CSAA’s performance metrics fall behind the private passenger standard auto and homeowners’ composite, thanks to its negative five-year average total returns on revenue and equity measures.
CSAA’s personal lines market presence in its selected territories and advantageous partnership with AAA Northern California, Nevada & Utah—a member of the American Automobile Association, Inc. (AAA)—helped offset its negative rating factors. The stable outlook reflects A.M. Best’s comfort level on the insurance group’s firm risk-adjusted capital position due to its “conservative reserve position and modest underwriting leverage.”
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A.M. Best Downgrades Ratings of Members of CSAA Insurance Group
