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| [February 14, 2013] |
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A.M. Best Affirms Ratings of Allstate New Jersey Insurance Group Members
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of
A- (Excellent) and issuer credit ratings (ICR) of "a-" of the members of
the Allstate New Jersey Insurance Group (collectively referred to
as Allstate New Jersey) (headquartered in Bridgewater, NJ). The
outlook for all ratings is stable. Allstate New Jersey's ultimate parent
is The Allstate Corporation (Allstate) (Northbrook, IL) [NYSE:
ALL]. (See below for a detailed listing of the companies.)
The rating affirmations are based on Allstate New Jersey's adequate
risk-adjusted capitalization and management's local market knowledge.
Allstate New Jersey continues to undertake various actions to enhance
its overall operating results as the dedicated New Jersey
property/casualty carrier for Allstate. In addition, Allstate New
Jersey's operating performance has generally benefited from its ability
to quickly react to changing market conditions. Furthermore, the group's
private passenger automobile margins have improved due to recent rate
activity, new business acceptance criteria and renewal book actions. To
better match price with risk, Allstate New Jersey's recent actions to
improve its homeowners' business have included rate increases, targeted
customer/property inspections and a reduction in mono-line homeowners'
exposure. Additionally, the ratings acknowledge the operational and
financial benefits Allstate New Jersey receives as an affiliate of Allstate
Insurance Company, which is a market leader in the U.S. insurance
industry.
Allstate New Jersey's positive rating factors are somewhat offset by its
geographic concentration within one state, which exposes its
capitalization and earnings to weather-related losses, competitive
pressures and regulatory mandates. This exposure has been evident in
recent years as its homeowners and auto physical damage lines of
business were negatively impacted by net catastrophe losses totaling
approximately $260 million in 2012, primarily from Superstorm Sandy, and
$95 million in 2011, with an overall combined ratio impact of
approximately 22 points and 12 points, respectively. However, to reduce
surplus volatility, Allstate New Jersey has not paid dividends in recent
years and maintains a conservative investment portfolio.
While the outlook for the ratings of Allstate New Jersey is stable, the
ratings could be downgraded if underwriting performance and/or capital
levels fall materially short of A.M. Best's expectations.
The FSR of A- (Excellent) and ICRs of "a-" have been affirmed for the
following members of Allstate New Jersey Insurance Group:
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• Allstate New Jersey Insurance Company
• Allstate New Jersey Property and Casualty Insurance Company
• Encompass Insurance Company of New Jersey
• Encompass Property and Casualty Insurance Company of New
Jersey
• Esurance Insurance Company of New Jersey
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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. Key criteria utilized include: "Risk
Management and the Rating Process for Insurance Companies";
"Understanding BCAR for Property/Casualty Insurers"; "Catastrophe
Analysis in A.M. Best Ratings"; and "Rating Members of Insurance
Groups." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, 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
RESERVED.
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