AM Best Revises Outlooks to Negative for The National Security Group, Inc. and Its Subsidiaries
29 Abril 2021 - 11:04AM
Business Wire
AM Best has revised the outlooks to negative from stable
and 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). AM Best also
has revised the outlooks to negative from stable and affirmed the
FSR of B++ (Good) and the Long-Term ICR of “bbb” of NSFC’s
affiliated life/health insurer, National Security Insurance Company
(NSIC). In addition, AM Best has revised the outlooks to negative
from stable and affirmed the FSR of B+ (Good) and the Long-Term ICR
of “bbb-” of NSFC’s wholly owned subsidiary, Omega One Insurance
Company, Inc. (Omega). Concurrently, AM Best has revised the
outlook to negative from stable and affirmed the Long-Term ICR of
“bb” of The National Security Group, Inc. (Wilmington, DE) [NASDAQ:
NSEC], the parent holding company. All companies are domiciled in
Elba, AL, unless otherwise specified.
The ratings of NSFC reflect its balance sheet strength, which AM
Best assesses as strong, as well as its marginal operating
performance, limited business profile and appropriate enterprise
risk management (ERM). The outlooks of NSFC have been revised to
negative from stable to reflect pressure on its balance sheet after
experiencing significant capital declines driven by catastrophic
weather-related losses. Although the negative impact on surplus was
offset largely through the issuance of an intercompany surplus
note, AM Best is concerned that NSFC’s quality of capital would
continue to diminish if there were a need to replenish capital
following another active catastrophe year. NSFC’s limited business
profile is driven by its geographic concentration in southeastern
states exposing results to future weather-related events. Rating
pressure may result on the group’s ERM assessment if it fails to
execute on specific risk management-related corrective actions
including transitioning away from certain catastrophe-prone
locations and implementing rate actions in states where it writes
business. Negative rating pressure also may occur if operating
results fall short of management’s expectations, or if volatility
from catastrophe activity results in further outsized losses, or
from a significant deterioration in capital strength.
The ratings of NSIC reflect its balance sheet strength, which AM
Best assesses as adequate, as well as its adequate operating
performance, limited business profile and appropriate ERM. The
outlooks of NSIC have been revised to negative from stable
following the significant decline in surplus in 2020 as a result of
lending capital via a surplus note to its affiliated
property/casualty company, NSFC, which experienced an increase in
frequency and severity of catastrophe losses.
The ratings of Omega reflect its balance sheet strength, which
AM Best assesses as strong, as well as its marginal operating
performance, very limited business profile and appropriate ERM. The
outlooks of Omega have been revised to negative from stable driven
by a recent loss of surplus, with Omega’s ability to absorb future
net losses becoming more limited as it reinsures $1 million of its
parent’s net catastrophe retention.
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 Guide to 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 credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
Copyright © 2021 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Jacqalene Lentz. CPA Director +1 908 439 2200,
ext. 5762 jacqalene.lentz@ambest.com
Christopher Sharkey Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Michael Lagomarsino, CFA, FRM Senior Director
+1 908 439 2200, ext. 5810
michael.lagomarsino@ambest.com
Jim Peavy Director, Communications +1 908 439
2200, ext. 5644 james.peavy@ambest.com
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