AM Best Revises Issuer Credit Ratings Outlook to Negative for Members of Nodak Insurance Group and NI Holdings, Inc.
26 April 2023 - 5:46AM
Business Wire
AM Best has revised the outlook to negative from stable
for the Long-Term Issuer Credit Ratings (Long-Term ICR) and
affirmed the Financial Strength Rating (FSR) of A (Excellent) and
the Long-Term ICRs of “a+” (Excellent) for the members of Nodak
Insurance Group (Nodak). The outlook of the FSR is stable.
Concurrently, AM Best has revised the outlook to negative from
stable and affirmed the Long-Term ICR of “bbb+” (Good) of NI
Holdings, Inc. (Fargo, ND) [NASDAQ: NODK], a publicly traded
holding company. (See below for a full listing of companies and
Credit Ratings [ratings].)
The ratings reflect Nodak’s balance sheet strength, which AM
Best assesses as strongest, as well as its strong operating
performance, neutral business profile and appropriate enterprise
risk management.
The revised outlook of the Long-Term ICRs considers the
deterioration in Nodak’s operating results over the past two years,
primarily resulting from an abnormal level of catastrophe losses in
its core states of operation, along with an increased severity of
loss due to inflation. In 2022, the group incurred multiple severe
weather-related events, all of which were in the vicinity of its
catastrophe retention, and in the year prior, results were dampened
by significant conditions impacting the crop lines. Consequently,
the group’s combined ratio has been above breakeven for two
consecutive years and reached a five-year high of 118.5% in 2022.
Also in 2022, underwriting losses coupled with unrealized capital
losses due to stock market volatility resulted in the group
reporting a nearly 20% decline in policyholders’ surplus.
Nodak’s management is addressing the volatility through rate,
inflation guard adjustments, aggressive re-underwriting of its book
of business, non-renewing particular coverages and requiring higher
deductibles. The group also continues to perform property
inspections and will no longer be accepting certain property risks.
AM Best expects that these actions will allow Nodak to improve upon
its current level of performance and return back to historical
norms. Although given the magnitude of the decline, in the absence
of improvement, the ratings are likely to be downgraded.
The FSR of A (Excellent) and the Long-Term ICRs of “a+”
(Excellent) have been affirmed, with the outlook of the Long-Term
ICRs revised to negative from stable, while the outlook of the FSR
is stable, for the following members of the Nodak Insurance
Group:
- American West Insurance Company
- Battle Creek Mutual Insurance Company
- Direct Auto Insurance Company
- Nodak Insurance Company
- Primero Insurance Company
- Westminster American Insurance Company
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Guide to Best's Credit Ratings. For information
on the proper use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London,
Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more
information, visit www.ambest.com.
Copyright © 2023 by A.M. Best Rating
Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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Lauren Magro Financial Analyst +1 908 439 2200,
ext. 5181 lauren.magro@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com
Joseph Burtone Director +1 908 439 2200, ext.
5125 joseph.burtone@ambest.com
Al Slavin Senior Public Relations Specialist +1
908 439 2200, ext. 5098 al.slavin@ambest.com
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