AM Best Downgrades Credit Ratings for Tuscarora Wayne Insurance Company and Affiliate; Affirms the credit ratings of Lebanon Valley Insurance Company | Business Insurance

know about this AM Best Downgrades Credit Ratings for Tuscarora Wayne Insurance Company and Affiliate; Affirms the credit ratings of Lebanon Valley Insurance Company

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OLDWICK, New Jersey, April 6, 2022–(COMMERCIAL WIRE)–I am better has downgraded the Financial Strength Rating (FSR) to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a+” (Excellent) from “aa-” (Superior) of Tuscarora Wayne Insurance Company and its subsidiary Keystone National Insurance Company. Together, these companies are collectively known as the Tuscarora Wayne Companies. At the same time, AM Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Lebanon Valley Insurance Company (Lebanon Valley). The outlook on these Credit Ratings (ratings) is stable. All companies are domiciled in Wyalusing, PA.

Tuscarora Wayne Companies’ ratings reflect the strength of its balance sheet, which AM Best rates as the strongest, as well as its strong operating performance, neutral business profile and adequate ERM.

Tuscarora Wayne Companies’ rating downgrades reflect a change in its operating performance assessment from strong to very strong, reflecting the deterioration in underwriting and operating performance metrics in recent years as a result of weather-related events and a greater severity in fire losses. Despite the deterioration, the group’s five-year average returns on capital and income modestly outperform its composite. Tuscarora Wayne Companies’ strongest level of balance sheet strength is supported by risk-adjusted capital at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), favorable historical reserve development, high-quality investment portfolio and prudent reinsurance program to mitigate the impact of weather-related losses. The neutral business profile reflects the companies’ niche product offerings in business and personal lines and affiliation with Keystone Insurance Group, allowing for profitable expansion opportunities. AM Best believes that the company’s ERM is appropriate for the organization’s risk profile, with scenario analysis and stress testing performed.

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Lebanon Valley’s ratings reflect the strength of its balance sheet, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate ERM. The strength of the balance sheet is supported by its strongest level of risk-adjusted capitalization, as measured by Best’s BCAR, a conservative investment portfolio and favorable reserve development. These strengths are offset by Lebanon Valley’s limited size and scale of operations. Adequate operating performance is driven by reported net income for the most recent five-year period driven by corrective underwriting actions, modest investment income and a prudent reinsurance program. This is partially offset by a high expense ratio compared to its composite due to an above-average fee structure and technology upgrade costs. The company’s limited business profile reflects its geographic concentration as a single-state underwriter in Pennsylvania, which exposes it to market, regulatory and catastrophic risk, somewhat offset by a comprehensive reinsurance program. AM Best believes Lebanon Valley’s ERM program is appropriate for its risk profile and coordinated across the entire Tuscarora Wayne organization. The ratings also consider the explicit and implicit support provided by the Tuscarora Wayne Companies, demonstrated through a surplus note, information technology support, claims administration, and co-management and board of directors.

This news release relates to credit ratings that have been posted on the AM Best website. For full rating information related 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 on the use and limitations of credit rating opinions, see Best Credit Score Guide. For information on the proper use of Best’s Credit Ratings, Best’s Performance Reviews, Best’s Preliminary Credit Reviews, and AM Best’s press releases, see Guide to the proper use of Best ratings and evaluations.

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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 operates in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information visit www.ambest.com.

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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