OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of Illinois Casualty Company (ICC). Concurrently, AM Best has affirmed the Long-Term ICR of “bbb-” (Good) of ICC Holdings, Inc. [NASDAQ: ICCH], the publicly traded holding company that owns 100% of ICC. The outlook of these Credit Ratings (ratings) is stable. Both companies are domiciled in Rock Island, IL.
The ratings reflect ICC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The stable outlooks reflect AM Best’s expectation that ICC will maintain its very strong balance sheet strength assessment, which is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). While underwriting measures have increased modestly in recent periods as premium growth outpaced surplus, metrics are generally in range of composite peers. The company shifted its common stock allocations in favor of fixed income assets, in return, lowering its common stock leverage to a level closer to the composite average. Positive factors of the balance sheet strength are offset partially by unfavorable trends in adverse development, driven by claims inflation in business owners policy and liquor liability lines of business.
Despite a modest degree of underwriting volatility, the company consistently generates operating earnings, benefiting from reliable net investment income. ICC implemented a series of rate increases across its property and liability lines, coupled with deductible changes, and tighter underwriting guidelines to achieve rate adequacy and improve results. AM Best assesses ICC’s business profile as limited, reflecting the company’s niche market within the Midwest, specializing in coverage for the food and beverage industry. A comprehensive reinsurance program protects the balance sheet from shock weather losses and mitigates risk of tail events. In the second quarter (Q2) of 2024, the company announced a merger agreement with Mutual Capital Group, Inc. (MCG), under which MCG will acquire all outstanding shares of ICCH. The transaction is expected to close in Q4 2024. ICC’s insurance operations are expected to continue to operate independently, though benefiting from the affiliation. As such, AM Best will continue to monitor the transaction as it progresses and after it closes.
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