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Insurance industry

A.M. Best Upgrades Commercial Casualty Insurance Company Ratings

Strategic Insights

— 1 min read

A.M. Best Co., a leading credit rating agency, has upgraded the financial strength rating (FSR) of Commercial Casualty Insurance Company (CCIC) to B+ (Good) from B- (Fair) due to the company's stable performance following its acquisition by Berkshire Hathaway Inc. The upgrade reflects CCIC's adequate risk-adjusted capitalization, orderly run-off of insurance liabilities, and its ownership by Berkshire, a financially strong company. However, the company's ratings are somewhat offset by adverse development of prior year loss reserves, modest business position as a run-off company, and volatile operating performance.

Key Takeaways:

  • A.M. Best Co. has upgraded the FSR of Commercial Casualty Insurance Company to B+ (Good) from B- (Fair) due to the company's stable performance.
  • The upgrade reflects CCIC's adequate risk-adjusted capitalization, orderly run-off of insurance liabilities, and its ownership by Berkshire Hathaway Inc.
  • The company's ratings are somewhat offset by adverse development of prior year loss reserves, modest business position as a run-off company, and volatile operating performance.
  • CCIC's stable financial position is attributed to its sound liquidity position, conservative invested asset-base, and financial flexibility benefits from its position as an indirect wholly owned subsidiary of Berkshire.
  • The ratings reflect the company's ability to run off its insurance liabilities in an orderly manner.
  • CCIC became an indirect wholly owned subsidiary of Berkshire on October 31, 2008, following an asset exchange agreement between Berkshire and White Mountains Insurance Group, Ltd.

Statistics:

  • A.M. Best Co.'s FSR of Commercial Casualty Insurance Company has been upgraded to B+ (Good) from B- (Fair).
  • CCIC's risk-adjusted capitalization is deemed adequate by A.M. Best Co.
  • The company's revitalized performance is attributed to its acquisition by Berkshire Hathaway Inc.
  • CCIC's invested asset-base is conservative, with a sound liquidity position.

Sources:

  • A.M. Best Co. press release (no date)
  • A.M. Best Co. ratings methodology (www.ambest.com/ratings/methodology)
  • A.M. Best Co. overview of rating process and rating methodologies (www.ambest.com/ratings)
  • A.M. Best Co. credit ratings (www.ambest.com/ratings)
  • Commercial Casualty Insurance Company (CCIC) (www.commercialcasualtyinsurance.com)
  • Berkshire Hathaway Inc. (www.berkshirehathaway.com)

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