|[October 10, 2013]
A.M. Best Revises Outlook to Negative for Casualty Underwriters Insurance Company
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has revised the outlook to negative from stable and
affirmed the financial strength rating of B++ (Good) and issuer credit
rating of "bbb" of Casualty Underwriters Insurance Company (CUIC)
The revised outlook reflects the recent underwriting losses on the
company's primary livestock risk protection (LRP)-lamb line of business
that raised the need for the pending modification of the program's
pricing model and led to a decline in premium writings and weakened
business profile. CUIC management will be working with the appropriate
government agencies over the next several years to modify the LRP-lamb
pricing model. The revised outlook also reflects the uncertainty
surrounding the viability of the existing level of federal protections.
The ratings of CUIC recognize its minimal underwriting leverage due t
its niche market exposure, low investment risk and conservative
management team. These positive rating factors are partly offset by
CUIC's unfavorable operating performance over the past five years, which
was mitigated by the strong federal protections.
Negative rating actions may follow significantly weakened federal
protections of CUIC's LRP-lamb program, a sudden, unexpected and
material decline in the company's planned levels of risk-adjusted
capitalization, or diminished liquidity measures.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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