A.M. Best Affirms Ratings of EMC Insurance Companies; Assigns Rating to EMC Insurance Group Inc.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength ratings (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) of A- (Excellent) and issuer credit ratings (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "a-" of EMC (1) (EMC Corporation, Hopkinton, MA, www.emc.com) The leading supplier of storage products for midrange computers and mainframes. Founded in 1979 by Richard J. Egan and Roger Marino, EMC has developed advanced storage and retrieval technologies for the world's largest companies. Insurance Companies (EMC), its property/casualty pool members and EMC Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Company (EMC Re). In addition, A.M. Best has assigned an ICR of "bbb-" to EMC Insurance Group Inc. [NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : EMCI EMCI Envirofacts Master Chemical Integrator EMCI External Memory Control Interface ], the group's publicly traded, downstream holding company. The outlook for all ratings is stable. All the above named companies are domiciled in Des Moines Des Moines, city, United States Des Moines (dĭ moin`), city (1990 pop. 193,187), state capital and seat of Polk co., S central Iowa, at the junction of the Des Moines and Raccoon rivers; inc. , IA. (See below for a detailed listing of the companies.) The affirmation of EMC's ratings reflects its strong risk-adjusted capitalization, significantly improved operating profitability in 2005 and 2006 and the continued benefits it will derive from management's re-underwriting, pricing initiatives and other corrective actions over the past few years associated with claims management, reserving methodology and product development. EMC's surplus grew a robust 20% in 2006, and the group maintains capitalization well in excess of levels required for its ratings. Partially offsetting these positive rating factors is the group's earnings variability earnings variability Fluctuations in a corporation's net income or earnings per share during a given period. Past earnings variability is generally considered undesirable because it makes investors less certain of future earnings per share and dividends. in recent years (largely due to fluctuations in its prior year loss reserve development), above-average expense ratio and the anticipated near-term pressures on profitability associated with the likelihood of less favorable prior year loss reserve development than occurred in 2006 and continued softening of property/casualty markets. A.M. Best will closely monitor the relationship between management's initiatives and EMC's underwriting profitability and loss reserve stability. Management attributes much of EMC's $100 million of unfavorable reserve development in 2004 to aggressive actions taken on individual case reserves as a result of diligent and extensive claim file review and improved communication between branch offices and the home office. The aggressiveness of the 2004 reserving actions is demonstrated by $61 million of subsequent favorable development of year-end 2004 case reserves. The group's reserves appear to have stabilized in 2005 and 2006 as evidenced by its reported favorable reserve development of $38 million and $103 million in those years, respectively, coming primarily from closed claim files. A.M. Best believes EMC's reserve position provides for a sufficient risk margin. The affirmation of EMC Re's ratings acknowledges its strong risk-adjusted capitalization and substantially improved operating profitability over the past several years; its role and strategic importance as a focused reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. within the EMC group; and the continued financial and operational support of its ultimate parent, Employers Mutual Casualty Company (EMCC EMCC See Emerging Markets Clearing Corporation (EMCC). ) (Des Moines, IA), the lead company within the EMC pool. These factors are partially offset by EMC Re's significant dependence on EMCC and the competitive challenges associated with EMC Re's position in the broker reinsurance market, which is generally comprised of large professional reinsurers that heavily influence reinsurance pricing, terms and conditions. The ICR of EMC Insurance Group Inc. recognizes the adequate capitalization of its property/casualty operating subsidiaries, the support of EMCC, excellent cash coverage of its holding company obligations and an absence of financial leverage since the company has no public debt outstanding. The FSRs of A- (Excellent) and the ICRs of "a-" have been affirmed for EMC Insurance Companies and its following property/casualty pool members: * Employers Mutual Casualty Company * EMCASCO Insurance Company * Illinois EMASCO Insurance Company * Dakota Fire Insurance Company * Hamilton Mutual Insurance Company * EMC Property and Casualty Company * Union Insurance Company of Providence * Farm and City Insurance Company The FSR of A- (Excellent) and ICR of "a-" have been affirmed for EMC Reinsurance Company. An ICR of "bbb-" has been assigned to EMC Insurance Group Inc. Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industries, including the banking and insurance sectors. For more information, visit www.ambest.com. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion