5 July 2018Actuarial & underwriting

AM Best upgrades National Independent Truckers RRG outlook to positive

Ratings agency AM Best has revised the outlook from stable to positive for the long-term issuer credit rating (ICR) of National Independent Truckers Insurance Company (NITIC), a risk retention group (RRG).

AM Best also affirmed NITIC's financial strength rating of B++ (Good) and the long-term ICR of "bbb". The outlook of the FSR remains stable.

The ratings reflect NITIC’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

NITIC's positive long-term ICR outlook reflects the company's strong overall balance sheet from prudent risk management, and AM Best’s expectation that the company will continue to improve its risk-adjusted capital position and operating performance.

AM Best also noted that surplus had benefited from NITIC’s extensive risk management program to produce underwriting profits in the difficult line of commercial automobile liability, supplemented by capital contribution requirements for policyholders in their first five years of RRG membership.

The rating affirmations of the FSR reflect the company's consistently strong operating performance demonstrated by comparison of its past five calendar years and five-year average combined ratios to AM Best’s commercial auto composite average.

"NITIC has continually produced pure net loss ratios well below the five-year composite average due to its robust risk management program and membership selectivity," said AM Best. "These factors are offset somewhat by the company’s limited business profile due to its narrow geographic scope and mono-line business orientation. Vulnerability to “key man” risk is another area of concern, as it pertains to the organisation’s heavy dependence on one individual for management, direction and execution of its business strategy."