AM Best Revises Outlooks to Positive for Indemnity National Insurance Company
AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of "a-" (Excellent) of Indemnity National Insurance Company (INIC) (Jackson, MS).
The Credit Ratings (ratings) reflect INIC's balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The positive outlooks reflect INIC's improved operating performance, primarily driven by profitable underwriting results and growing investment earnings. Following the change in ownership structure in 2017, the new management team identified certain new bonding opportunities and other profitability initiatives. Management's strategic focus has remained predominantly on a commercial surety bonding segment, as well as some excess and umbrella liability policies. Management has implemented a series of profitability initiatives, such as a disciplined underwriting approach, appropriate risk identification & management measures, as well as continuing to explore other classes of surety to offset concentration risk. However, the company's underwriting performance is impacted by an elevated underwriting expense structure, reflecting commissions paid to affiliated agencies, as well as administrative expenses paid to its parent, as part of the cost-sharing agreement. AM Best expects INIC's prospective underwriting performance to remain profitable as volatility of key metrics is anticipated to be low.
INIC's balance sheet strength assessment of very strong reflects its risk-adjusted capitalization at the strongest level, as measured by Best's Capital Adequacy Ratio (BCAR), largely driven by consistent surplus growth over the years, a high-quality, well-diversified investment portfolio, a comprehensive reinsurance program and stable loss reserving trends. These positive attributes are partially offset by slightly elevated underwriting leverage measures relative to composite norms.
INIC's limited business profile is reflective of its product concentration consisting of predominantly premium writings derived from commercial surety bonding products and some umbrella/excess liability policies.
INIC's appropriate ERM is demonstrated through a platform that adheres to strong corporate governance practices through regular engagement with the board.
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