16 May 2016Actuarial & underwriting

AM Best affirms National Interstate FSR

AM Best has affirmed the financial strength rating of A (Excellent) of National Interstate Insurance Company and its affiliates, National Interstate Insurance Company of Hawaii, Triumphe Casualty Company and Vanliner Insurance Company (collectively referred to as National Interstate).

The outlook for each rating is stable.

The rating reflects the captive’s excellent long-term operating performance; strong risk-adjusted capitalisation achieved through generally profitable underwriting results; and demonstrated expertise within its niche transportation market, according to AM Best.

In addition, the rating acknowledges the group’s experienced management team and conservative operating philosophy. The positive rating attributes are derived from management’s focus on maintaining rate integrity, controlled claims handling and detailed segmentation of risks that are supported by effective technology resources.

Additionally, National Interstate’s focus on providing alternative risk transfer programmes for the specialty transportation segment provides the group with a sustainable competitive advantage, particularly in terms of pricing, claims adjusting and loss control. The group’s financial flexibility is also enhanced by its publicly traded immediate parent, NATL, which maintains minimal financial leverage and strong interest coverage.

Partially offsetting these positive rating factors were adverse development of prior years’ loss reserves for commercial auto, the group’s largest line, and the associated deterioration in underwriting results over the past three calendar years; and the concentration of business within the passenger and truck transportation industries.

Favourable rating actions are unlikely in the near term. Negative rating actions could occur should underwriting or operating performance not demonstrate improvement toward a level in line with historical results or if adverse development of prior years’ loss reserves continues, said AM Best.

Vanliner is domiciled in Fenton. All other companies are headquartered in Richfield, OH. NATL is approximately 51 percent owned by Great American Insurance Company, a wholly owned subsidiary of American Financial Group.