A.M. Best Revises Outlook to Negative of National Security Group
23 April 2009 - 4:45AM
Business Wire
A.M. Best Co. has revised the outlook to negative from
stable and affirmed the financial strength rating (FSR) of B++
(Good) and issuer credit ratings (ICR) of �bbb� of National
Security Group (National Security) and its member, National
Security Fire and Casualty Company. A.M. Best also has revised
the outlook to negative from stable and affirmed the ICR of �bb� of
National Security�s parent company, The National Security
Group, Inc. (NASDAQ: NSEC).
Additionally, A.M. Best has affirmed the FSR of B+ (Good) and
ICR of �bbb-� of National Security�s wholly owned subsidiary,
Omega One Insurance Company, Inc (Omega One). Concurrently,
A.M. Best has affirmed the FSR of B (Fair) and ICR of �bb� of the
life/health company, National Security Insurance Company.
The outlook for these ratings is stable. All companies are
domiciled in Elba, AL.
The negative outlook of National Security reflects the recent
decline in its risk-adjusted capitalization and continued exposure
to losses from weather-related events. The group�s negative
operating performance in 2008 was largely due to a record frequency
of tornado and windstorm events and hurricane losses, which are a
result of National Security�s geographic and product concentration
in the Gulf Coast states. However, in an effort to improve
underwriting results and minimize the potential impact of future
weather events, management continues to implement coastal risk
reductions, higher deductibles and rate increases. Additionally,
the group reported sizable unrealized capital losses resulting from
unprecedented capital market volatility, which contributed to its
reduction in capitalization.
The ratings of Omega One acknowledge its low underwriting
leverage and generally favorable operating performance. Partially
offsetting these positive rating factors is the company�s limited
business profile, which leaves it susceptible to severe
weather-related losses, as evidenced in 2008.
The ratings of National Security Insurance Company recognize the
limited geographic profile and continued decline in its capital and
surplus due to investment losses. The ratings also reflect the
company�s favorable level of risk-adjusted capitalization and net
operating gain recorded at year-end 2008, although the large
realized capital loss at year end resulted in a net loss for the
fourth consecutive year.
For Best�s Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.
The principal methodologies used in determining these ratings,
including any additional methodologies and factors that may have
been considered, can be found at
www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is a global full-service
credit rating organization dedicated to serving the financial and
health care service industries, including insurance companies,
banks, hospitals and health care system providers. For more
information, visit www.ambest.com.
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