|[February 21, 2014]
A.M. Best Affirms Ratings of National Interstate Corporation and Its Property/Casualty Subsidiaries
OLDWICK, N.J. --(Business Wire)--
A.M. Best has affirmed the financial strength rating (FSR) of A
(Excellent) and issuer credit ratings (ICR) of "a+" of National
Interstate Insurance Company and its affiliates, National
Interstate Insurance Company of Hawaii, Inc., Triumphe Casualty
Company and Vanliner Insurance Company (Fenton, MO)
(collectively referred to as National Interstate). Concurrently, A.M.
Best has affirmed the ICR of "bbb+" of National Interstate Corporation
(NATL) [NASDAQ: NATL]. The outlook for all ratings is positive. All
companies are headquartered in Richfield, OH, unless otherwise
specified. NATL is 51.7% owned by Great American Insurance Company,
a wholly owned subsidiary of American Financial Group, Inc.
The ratings reflect National Interstate's excellent long-term operating
performance, which outperforms the commercial automobile peer composite,
strong risk-adjusted capitalization achieved through generally
profitable underwriting results and demonstrated expertise within its
niche transportation market. The ratings also acknowledge the company's
experienced management team and conservative operating philosophy.
National Interstate's focus on specialty transportation provides the
group with a sustainable competitiveadvantage, particularly in terms of
pricing, claims adjusting and loss control, which has resulted in high
policyholder retention rates. Management has broadened the group's
product base through expansion into underserved markets as evidenced by
growth within its alternative risk transfer (ART) and transportation
components. Additionally, the group's financial flexibility is enhanced
by its publicly traded immediate parent, NATL, which maintains minimal
financial leverage and strong interest coverage.
Partially offsetting these positive rating factors are the downturn in
underwriting performance in 2013 due to a number of unrelated severe
loss events, slight adverse development occurring on the commercial auto
line and the concentration of business within the passenger and truck
Positive rating actions could be taken on National Interstate's ratings
if underwriting and operating results improve as anticipated and
outperform other similarly rated commercial auto insurers while
maintaining a strong level of risk-adjusted capitalization. Key factors
that could trigger negative rating actions on the company's ratings
include a weakening in operating performance and/or risk-adjusted
capitalization, particularly if the resulting performance trails that of
similarly rated peers.
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 © 2014 by A.M. Best Company, Inc. ALL RIGHTS
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