Specialist auto insurer has credit ratings withdrawn

Company chooses to bow out of interactive rating process after growth is undercut by losses

Specialist auto insurer has credit ratings withdrawn

Insurance News

By Allie Sanchez

AM Best maintained the credit ratings of auto insurer Unique Insurance in a recent report.

The ratings firm affirmed the specialty insurer’s credit financial strength rating (FSR) of “C++” or Marginal, which translates to a stable outlook; and long term issuer credit rating (Long Term ICR) of “b+”, which translates to a negative mark.

However, AM Best has withdrawn these ratings following a request by Unique Insurance to bow out of its interactive rating process.

A report by Business Wire explained that the firm earned a marginal rating because its aggressive growth has been undercut by significant losses.

Still, Unique Insurance reported a positive net income from profits from investments and a “substantial fee income,” which offset overall underwriting losses.

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The specialty insurer seems to be riding a trend in the personal auto insurance market in which high claims costs are eating into profits.

A separate report by trade publication Market Watch said that the personal auto insurance sector has entered slow growth territory, posting its weakest performance in 15 years.

Quoting a report by credit rating firm Fitch Ratings, the publication said that the property/casualty industry loss ratio reached 108% in 2016, rising by 3.5% percentage points from the previous year.

Fitch reviewed accounting filings by 10 publicly listed P/C insurers, revealing that higher claims costs outpaced the spate of recent rate increases in auto insurance.

Market Watch added that the performance by this sector will most likely be affected by the $7 billion loss in personal auto reported by major insurer State Farm.

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