SENECA INSURANCE COMPANY, INC.

Transcription

1 SENECA INSURANCE COMPANY, INC. New York, New York Ultimate Parent: Fairfax Financial Holdings Limited SENECA INSURANCE COMPANY, INC. 160 Water Street, New York, NY Web: Tel: Fax: AMB#: NAIC#: Ultimate Parent#: FEIN#: BEST S CREDIT RATING Best s Financial Strength Rating: A Outlook: Stable Best s Financial Size Category: XIII The company s rating reflects its reinsurance agreement with United States Fire Insurance Company (AMB# ) as a member of the Crum & RATING RATIONALE Rating Rationale: The rating applies to the four members of the Crum & Forster Insurance pool, led by United States Fire Insurance Company, and several reinsured affiliates, and are based on the consolidated financial position and operating performance of these companies. The rating reflects the group s diversified product portfolio, diminished asbestos and environmental exposure and historically supportive capital levels. The rating also reflects the implicit and explicit support of the group s ultimate parent, Fairfax Financial Holdings Limited (Fairfax), which maintains a solid level of liquidity and has historically supported its subsidiaries operations. A Partially offsetting these positive rating factors is the group s recognition of adverse development over the past few years, due in part to older accident years asbestos and environmental reserves and development on more recent accident years relating to general liability and California workers compensation. These reserves have in part been ceded to affiliates, which causes distortions in historical development patterns and leads to dependence on qualitative assessments by management. The group is also exposed to competitive market conditions that persist in the commercial lines sector, relatively unfavorable expense levels, and sizable affiliated investments. The outlooks reflect A.M. Best s expectation that the group will improve its underwriting performance as a result of management s ongoing corrective actions. Actions include a re-underwriting of its commercial lines book with a reduced focus on property business as well as California workers compensation and specific liability business. In addition, the group ceded certain loss reserves relating to its general liability and net asbestos, environmental and other latent liabilities to an affiliate, significantly reducing those exposures. The group has paid significant shareholder dividends in recent years to Fairfax, which manages the group s investment portfolio, but these dividends have not resulted in any significant deterioration in the group s solid risk-adjusted capital. While A.M. Best believes the group members are well positioned at their current rating levels, favorable rating action is possible should the group maintain a strong capital position and underwriting and operating results that outperform the averages of its peers. Factors that could lead to negative rating actions include operating performance falling short of A.M. Best s expectations and/or an erosion of surplus that causes a decline in risk-adjusted capital to a level no longer supporting the current rating A.M. Best Company, Oldwick, NJ Printed June 20, Page 1 of 7

2 FIVE-YEAR RATING HISTORY Date Best s FSR Date Best s FSR 05/30/14 A 02/09/11 A 07/12/13 A 06/02/10 A 03/28/13 A 06/22/09 A 05/03/12 A KEY FINANCIAL INDICATORS ($000) Statutory Data Direct Premiums Written Premiums Written Pre-tax Operating Income Income Total Admitted Assets Policyholders Surplus , ,072 37,626 28, , , , ,113 27,263 26, , , , ,910 21,447 22, , , , ,053 23,830 22, , , ,255-43,152 11,842 61, , ,958 Profitability Leverage Liquidity Inv. Pre-tax NA NPW Overall Oper. Comb. Yield ROR Inv to Liq. Cash Ratio (%) (%) Lev (%) flow (%) Yr (*) Within several financial tables of this report, this company is compared against the Commercial Property Composite. (*) Data reflected within all tables of this report has been compiled from the company-filed statutory statement. BUSINESS PROFILE The Crum & Forster Insurance Group (C&F) provides a broad range of specialty commercial insurance products produced through over 1,600 independent insurance producers nationwide. Principal lines of business provided by the company include workers compensation, other liability, group A&H and commercial multi-peril. Standard lines, including property business, has been reduced significantly in recent years as a result of re-underwriting initiatives. The group maintains a focused underwriting strategy targeting challenging classes of business requiring individual risk underwriting and pricing. C&F s business strategy is to adhere to a centrally controlled underwriting philosophy and focus on generating underwriting profit through careful risk selection, appropriate pricing, aggressive loss control, engineering and claims handling. Recent business initiatives focus primarily on specialty programs that can be effectively underwritten and priced. To enhance its strategies, C&F has also expanded and diversified its distribution channels, including the appointment of certain specialty producers as a complement to its existing producer base. The diversification of distribution channels allows for the group s production source to be more adaptable to changes in underwriting preferences and market conditions. Target customers are generally small to medium-sized companies across numerous industry groups with contractors making up the largest segment. Seventeen regional and branch offices, strategically located throughout the United States, service C&F s producers and policyholders. Field underwriters have limited authority, and a significant percentage of business is referred to the home office for review. C&F monitors its catastrophe property exposure in relation to both total exposed policy limits and modeled loss measures of probable maximum loss and average annual loss. Overall policy limits have been reduced significantly for catastrophe-exposed business as part of the property re-underwriting initiative. Affiliations: The company is a member of and participates in the business underwritten or serviced by the Fair Plan. TOTAL PREMIUM COMPOSITION & GROWTH ANALYSIS DPW Reinsurance Prem Assumed Reinsurance Prem Ceded ($000) (% Chg) ($000) (% Chg) ($000) (% Chg) , , , , , , , , , , , , , , , Yr CAGR NPW NPE ($000) (% Chg) ($000) (% Chg) , , , , , , , , , , Yr CAGR Territory: The company is licensed in the District of Columbia, Puerto Rico and all states BY-LINE BUSINESS ($000) Reinsurance Reinsurance DPW Prem Assumed Prem Ceded Product Line ($000) (%) ($000) (%) ($000) (%) Workers Comp 6, , Allied Lines 6, , , Inland Marine 15, , , Oth Liab Occur 19, , , Fire 11, , , Com l MultiPeril 85, , , All Other 9, , Total 155, , , Business NPW Retention Product Line ($000) (%) (%) Workers Comp -1, Allied Lines -5, Inland Marine -5, Oth Liab Occur -5, Fire -5, Com l MultiPeril -19, All Other Total -43, BY-LINE RESERVES ($000) Product Line Workers Comp 11,411 12,642 13,681 12,823 Allied Lines 10,444 10,248 5,861 5,743 Inland Marine 7,171 1,789 3,918 3,731 Oth Liab Occur 60,713 47,398 33,683 23,539 Fire 12,442 7,489 4,364 2,952 Com l MultiPeril 73,590 64,252 55,951 50,618 All Other 3,822 6,007 9,255 10,609 Total 179, , , , A.M. Best Company, Oldwick, NJ Printed June 20, Page 2 of 7

3 GEOGRAPHIC BREAKDOWN BY DIRECT PREMIUM WRITINGS ($000) New York 50,133 46,431 42,266 39,925 39,934 Texas 12,751 10,110 5,688 1, New Jersey 10,577 10,147 8,302 6,703 6,980 Kentucky 9,309 8,485 8,462 8,178 9,120 California 6,878 7,138 5,514 3,982 3,548 Illinois 5,859 4,206 3,449 3,078 2,996 Pennsylvania 5,206 4,503 3,628 2,631 3,066 Colorado 4,222 3,318 2,944 2,440 2,277 Virginia 3,860 3,927 3,577 3,323 3,315 Florida 3,557 4,498 3,480 2,382 2,626 All Other 42,903 40,801 28,962 24,188 23,517 Total 155, , ,271 98,726 97,873 RISK MANAGEMENT C&F participates in risk management at the Fairfax group level under the direction of a Chief Risk Officer. Risks are reviewed on a quarterly basis with risk managers at the C&F level. This practice allows C&F to share information, resources and best practices with the other operating entities. Fairfax monitors and estimates each of its anticipated risks as a percentage of capital. At the C&F level, the business risks relating to the operating, underwriting and regulatory environments are addressed through various means. C&F and Fairfax level actuaries, as well as the external auditor review the loss reserves. C&F also benefits from group level disaster recovery plans for IT systems and ongoing operations. Risks relating to pandemics or catastrophes that affect staffing are also addressed through offsite facilities. C&F s current reinsurance program includes standard property per risk coverage of $45 million excess a $5 million retention and catastrophe limits of $60 million excess a $30 million retention. Workers compensation coverage of $25 million excess $40 million reflects a reduction in exposures. Umbrella business is reinsured at $25 million excess a $5 million retention for admitted risks; non-admitted business is covered on a quota share/excess of loss basis under which the group retains $2.5 million. OPERATING PERFORMANCE Operating Results: C&F s average total returns over the past few years fall short of the group s peers due primarily to the group s poor calendar year underwriting performance, low investment yields and net capital losses. Underwriting losses for the group since 2010 were mainly driven by adverse development on prior years, as accident year performance continued a favorable five year trend, benefiting from lower catastrophe losses (except 2012), more profitable specialty lines focus and the discontinuation of unprofitable specialty and standard programs. During February 2011 C&F purchased First Mercury Insurance Company the results of which are now consolidated for the group for all years shown. Prior to the close of the transaction, First Mercury posted a $75 million reserve charge. Since then a portion of the book continued to develop adversely, and in 2013 the group entered into an affiliated loss portfolio transfer of the effected reserves. investment yields have been dampened in recent years by the group s shift into shorter term investments and generally low interest environment. Total returns have historically benefited from realized and unrealized investment gains. Realized gains have been lower than average since 2011 due in part to the group s defensive investment strategy which includes a fully hedged common stock portfolio, an increase in short-term invested assets as well as a concentration in investments which in the long-term are expected to outperform but recently have underperformed. PROFITABILITY ANALYSIS ($000) Company Pre-tax After-tax Operating Operating Total Income Income Income Return ,626 28,234 28,355 33, ,263 20,532 26,614 28, ,447 16,044 22,777 21, ,830 17,389 22,168 23, ,842 21,435 61,526 62,708 5-Yr Total 122, , , ,332 Company Industry Composite Pre-tax Return Operating Pre-tax Return Operating ROR on Ratio ROR on Ratio Yr Avg Underwriting Results: C&F s calendar year underwriting performance has improved over the past few years despite varying levels of adverse development. The 2010 calendar year includes 8 points added by First Mercury s adverse development relating to their construction defect claims. In 2011, all A&E reserves were transferred to an affiliate which has stopped the negative effects of adverse development on these older accident years. Calendar year 2012 included another year of adverse development mainly relating to construction defect claims and other specialty classes of business. In addition to the specialty lines adverse development, the group incurred unfavorable development on its California Workers Compensation business, included in the standard lines segment. During 2013, the group has begun to limit its California workers comp book and has ceded (similar to the loss portfolio transfer of A&E in 2011) most of its troubled construction defect reserves to an affiliate. On an accident year basis, underwriting results have improved over the past few years reflecting the group s focus on its more profitable specialty lines, improved rate environment on most lines and continuing expense management. The group s underwriting expense ratio declined since 2011, as a result of efforts to reduce expenses and a sizable increase in net written premiums over that time period. The increase in premium was driven by growth in the specialty E&S segments, mainly the general liability line, most notably A&H and environmental business. The group s five-year average expense ratio remains elevated compared with the composite average although it has improved over the past two years given the growth in business and expense reduction initiatives adopted by the group. UNDERWRITING EXPERIENCE Undrw Income ($000) Loss Ratios Expense Ratios Ind Pure Loss LAE Loss LAE & Other Total Div. Comb. Comm. Exp. Exp. Pol. Ratio Comb. Ratio , , , , , Yr Total/Avg 57, A.M. Best Company, Oldwick, NJ Printed June 20, Page 3 of 7

4 BY-LINE LOSS RATIO Product Line 5-Yr Avg Workers Comp Allied Lines Inland Marine Oth Liab Occur Fire Com l MultiPeril All Other Total DIRECT LOSS RATIO BY STATE 5-Yr Avg New York Texas New Jersey Kentucky California Illinois Pennsylvania Colorado Virginia Florida All Other Total Investment Results: The group s total return on invested assets declined significantly over the past few years as net investment yields and investment gains declined, and underwriting losses were incurred. In addition, total invested assets declined significantly over the past five years, primarily as a result of dividend payments. The group s investments are managed by Hamblin Watsa Investment Counsel Ltd. (HWIC), which is the investment management subsidiary of Fairfax. Hamblin Watsa conducts its own analysis and concentrates on long-term, value-oriented investments. The investment strategy seeks to provide sufficient liquidity while preserving invested capital, with an emphasis on maximizing total investment returns. All of the Fairfax companies are allocated a portion of the investments which are centrally managed by HWIC. The investments are allocated based on the capital size of the company as well as its capacity for higher risk investments. The group s percentage of total assets invested, at about 85%, is in-line with its peer composite. As a percentage of the policyholders surplus investment composition differs from the group s peers as common stock (including large affiliated holdings) accounts for a much larger percentage of invested assets and long term bonds is a lower portion of invested assets. In addition, cash and short term invested assets are significantly higher. investment income has fallen markedly over the past few years, reflecting lower dividend and interest payments from the group s reduced equity and bond portfolios coupled with a significant increase of lower yielding short-term investments. In addition to net investment income, the group s investments generated variable levels of gains and losses over the past five years. In 2013, the group recognized both unrealized losses on its bond portfolio and realized losses on the total return swaps which hedge its common stock portfolio. In 2011 and 2012, realized gains benefited net income. These gains are lower than the group s historical norms, as higher than average losses on the group s hedging program were realized and 2012 included an OTTI of an investment in one of the group s value investments. In 2011, the unrealized losses were mainly due to a loss recorded on the group s value investments which represent those investments which in the mid-term are expected to outperform the industry but in the short term are suffering some financial hardship. The group has a large investment in municipal bonds which at year end had an unrecorded loss of market value over book value. The realized gains in 2010 resulted primarily from sales of long-term bonds and equities, offset by costs associated with the group s hedging program. INVESTMENT GAINS Company Realized Unrealized Inv Capital Capital Year Income Gains Gains , , ,769 6,083 1, ,104 6, ,603 4,779 1, ,009 40,090 1,182 5-Yr Total 64,965 57,806 7,893 Company Industry Composite Inv Inc Inv Return on Total Inv Inc Inv Growth Yield Inv Assets Return Growth Yield Year (%) (%) (%) (%) (%) (%) Yr Avg BALANCE SHEET STRENGTH Capitalization: Although down in 2013, C&F s overall risk-adjusted capital position, as measured by Best s Capital Adequacy Ratio (BCAR), has been historically supportive of the current rating and is expected to improve based on anticipated surplus, premium and reserve levels for The decrease in surplus over the past few years has been driven by shareholder dividends, adverse development, negative macro-economic impacts on underwriting, as well as other changes. During 2013, the most notable other change was realized due to a decrease of $75 million in net deferred tax assets and an increase in non-admitted assets of $55 million due to goodwill and intangible assets resulting from acquisitions. Strengthening of prior years loss reserves has had a negative impact on capital generation over the past few years. Additionally, the strengthening coupled with the effects of the loss portfolio transfers has distorted the prior years development patterns which leads to dependence on qualitative assessments by management. However, with the sale of the A&E and a portion of the construction defect liabilities, run-off of California workers compensation business and the declining effect of finite reinsurance, we expect the volatility in the reserve levels to lessen. CAPITAL GENERATION ANALYSIS ($000) Source of Surplus Growth Pre-tax Realized Unrealized Operating Capital Income Capital Year Income Gains Taxes Gains , ,392 4, ,263 6,083 6,732 1, ,447 6,732 5, ,830 4,779 6,441 1, ,842 40,090-9,593 1,182 5-Yr Total 122,008 57,806 18,374 7,893 Source of Surplus Growth Change % Chg Contrib. Other in in Year Capital Changes , , , , , , ,610 28, ,000-28,080-24, Yr Total -159,301-22,832-12, A.M. Best Company, Oldwick, NJ Printed June 20, Page 4 of 7

5 QUALITY OF SURPLUS ($000) Surplus Other Contributed Unassigned Year Notes Debt Capital Surplus , , , , ,076 98, , , , ,882 Year-End Conditional Adjusted Year Reserves , , , , , , , , , ,958 LEVERAGE ANALYSIS Company Industry Composite Res. Res. NPW to to NPW to to Current BCAR: CEDED REINSURANCE ANALYSIS ($000) Company Bus. Reins. Ceded Ret. Recov. to Reins. to (%) (%) (%) Industry Composite Bus. Reins. Ceded Ret. Recov. to Reins. to (%) (%) (%) Ceded Reins. Total , , , , , REINSURANCE RECOVERABLES ($000) Paid & Unpaid Losses IBNR Unearned Premiums Other Recov* Total Reins Recov US Affiliates ,240 79, , ,089 US Insurers Total (ex US Affils) Grand Total ,240 79, , ,948 * Includes Commissions less Funds Withheld LOSS & ALAE RESERVE DEVELOP.: CALENDAR YEAR ($000) Orig. Developed Develop. Develop. Develop. Unpaid Unpaid Loss Reserves to to to Reserves Res. to Reserves Thru 13 Orig. (%) (%) NPE Develop. (%) Calendar Year ,692 72, ,904 82, , , , , , , LOSS & ALAE RESERVE DEVELOP.: ACCIDENT YEAR ($000) Accident Year Orig. Loss Reserves Developed Reserves Thru 13 Develop. to Orig. (%) Unpaid Acc. Yr Loss Ratio Acc. Yr Comb. Ratio ,700 29, ,493 37, ,021 45, ,000 59, ,432 77, Liquidity: The group s level of quick liquidity is significantly above that of the commercial casualty peer group, reflecting the above-average allocation of investments to cash and short-term investments. Cash flows have historically been variable as a result of catastrophe payments and reinsurance commutations; however, with the recent increase in premiums and the reduction A&E exposure, positive cash flows have stabilized operating cash flow was also impacted by a $233 million payment made to transfer the A&E reserves to an affiliate. LIQUIDITY ANALYSIS Company Industry Composite Quick Current Overall Agents Bal. to (%) Quick Current Overall Agents Bal. to (%) CASH FLOW ANALYSIS ($000) Company Industry Composite Underw Oper Underw Oper Underw Oper Cash Cash Cash Cash Cash Cash Cash Year Flow Flow Flow Flow (%) Flow (%) Flow (%) Flow (%) ,665 17, , ,274 43,561 6, ,434 35,777-6, ,340 49,277 16, ,072 22,383-29, Yr Total 154, , ,080 INVESTMENT LEVERAGE ANALYSIS (% OF ) Industry Company Composite Class Real Other Non-Affil. Class 3-6 Estate/ Invested Common Inv. Affil. 3-6 Common Bonds Mtg. Assets Stocks Inv. Bonds Stocks INVESTMENTS - SECURITIES Current Year Distribution of Bonds By Maturity Years Yrs-Avg Maturity Government Gov t Agencies & Muni Industrial & Misc Total Bonds (000) 64, , , , ,992 US Government Foreign - All Other 0.6 State/Special Revenue - US Industrial & Misc - US Private Issues Public Issues A.M. Best Company, Oldwick, NJ Printed June 20, Page 5 of 7

6 Bond Quality (%) Class Class Class Class Class INVESTMENTS - EQUITIES Stocks (000) 47,683 78,198 71,684 58,204 49,021 Unaffiliated Common Affiliated Common Unaffiliated Preferred INVESTMENTS - OTHER INVESTED ASSETS Other Inv Assets (000) 10,722 41,449 23,417 30,605 22,797 Cash Short-Term Schedule BA Assets 3.7 All Other 3.3 HISTORY The company was incorporated on March 29, 1978, under the laws of New York as Eagle Star Insurance Company of America. Following a change in ownership and management, the present title was adopted on April 8, Pursuant to a transaction entered into in February 1990 between Eagle Star Insurance Company Ltd. (Eagle Star) and the company, all liabilities arising from business written by the company prior to December 31, 1986 have been assumed by The Continental Insurance Company and Eagle Star. The transaction was approved by the New York Department of Insurance effective as of December 31, All of the outstanding stock of the company is owned by The North River Insurance Company, which is a wholly-owned subsidiary of Crum & Forster Holdings, Corp., which is a wholly-owned subsidiary of Fairfax (US) Inc. The latter is 100% owned by FFHL Group Ltd., which is a wholly-owned subsidiary of Fairfax Financial Holdings Limited, Toronto, Ontario, Canada. Paid-up capital of $4,800,000 is comprised of 24,000 common shares at $200 par value each. All authorized shares are outstanding. MANAGEMENT On August 31, 2000 Fairfax Financial Holdings Limited, through its subsidiary, The North River Insurance Company acquired Sen-Tech International Holdings Inc. (Sen-Tech), Seneca Insurance Company s parent, in a cash transaction. The Seneca Insurance Company, Inc. was not included in Crum & Forster s intercompany pooling agreement and has been operating independently. Effective April 1, 2013, Seneca Insurance Company, Inc. entered into a 100% quota share reinsurance agreement with U.S. Fire Insurance Company, (a wholly owned subsidiary of Crum & Forster Holdings, Corp.), whereby all of the business of Seneca Insurance Group, including loss reserves and unearned premiums as of March 31, 2013 is ceded to U.S. Fire Insurance Company. In May 1996, The Trident Partnership, L.P. had purchased a 72% equity interest in Sen-Tech from Odyssey Partners, L.P. (Odyssey). On October 8, 1993, J.P. Morgan Capital Corp., Boston Insurance Investors, Third Avenue Value Fund and National Reinsurance Corporation had purchased a 28% collective ownership interest through a private placement of $10.0 million of common stock, which reduced Odyssey s controlling interest to approximately 72%. Seneca Insurance Company, Inc. is under the direction of Marc Wolin (President and CEO), with underwriting operations led by Keith McCarthy (Executive Vice President and Chief Underwriting Officer) and Steven Fomchenko (Senior Vice President Surplus Property and Inland Marine). Seneca was formerly under the direction of Douglas Libby who is currently the President and Chief Executive Officer of Crum & Forster Holdings Corp., the Company s indirect parent company. Marc Wolin has been with Seneca since 1989 and previously held the position of Chief Operating Officer and Chief Financial Officer. Officers: Chairman of the Board, Douglas M. Libby; President, Secretary, Treasurer and Chief Executive Officer, Marc T. A. Wolin; Executive Vice President and Chief Underwriting Officer, Keith McCarthy; Senior Vice Presidents, Steven Fomchenko (Inland Marine and Surplus Property), Chris I. Stormo (Administration); Vice President and Chief Information Officer, Ahmed K. Yaknour; Vice Presidents, Kathleen G. Alicks, David W. Bishop (Surplus Property), Albert J. Caradonio (Reinsurance), Gregory A. Crapanzano (Claims), Thomas A. Diaczynsky (Surplus Property), Frank V. Donahue, Jr. (Claims), David A. Hansen (Surplus Property), John W. Holmes (Arizona Branch), George G. Juzdan, Michael S. Kotte (Kentucky Branch), Matthew W. Kunish (Actuarial), Vincent I. Maida, Rechelle A. McArthur, Kenneth S. McClelland, Kathleen A. McNamara, Carol Muller, John R. Moran, Jr., Lauren Parente, John W. Rendina, Kenneth J. Ryan (Surety), Michael J. Skadra (E & S Casualty), Marguerite Williams. Directors: Paul W. Bassaline, Harvey Childs, Stephen A. Eisenmann, Donald R. Fischer, David J. Ghezzi, Gabriel M. Krausman, Matthew W. Kunish, Albert B. Lewis, Douglas M. Libby, Stephen M. Mulready, Mary Jane Robertson, Chris I. Stormo, Marc T. A. Wolin. REGULATORY An examination of the financial condition was made as of December 31, 2010, by the insurance department of New York. The 2013 annual independent audit of the company was conducted by PricewaterhouseCoopers, LLP. The annual statement of actuarial opinion is provided by Jennifer S. Byington, ACAS, MAAA. BALANCE SHEET ADMITTED ASSETS ($000) 12/31/13 12/31/12 13% 12% Bonds... 64, , Preferred stock... 9, Common stock... 22, Cash & short-term invest... 10,722 39, Other non-affil inv asset... 1, Investments in affiliates... 47,683 46, Total invested assets , , Premium balances... 36,390 35, Accrued interest , All other assets... 35,367 18, Total assets , , LIABILITIES & SURPLUS ($000) 12/31/13 12/31/12 13% 12% Loss & LAE reserves , Unearned premiums... 91, Conditional reserve funds All other liabilities... 61,770 14, Total liabilities... 61, , Capital & assigned surplus... 31,076 31, Unassigned surplus , , Total policyholders surplus , , Total liabilities & surplus , , A.M. Best Company, Oldwick, NJ Printed June 20, Page 6 of 7

7 SUMMARY OF 2013 OPERATIONS ($000) Funds Provided from Statement of Income 12/31/13 Operations 12/31/13 Premiums earned... 48,525 Premiums collected... 83,385 Losses incurred... 21,884 Benefit & loss-related pmts 44,199 LAE incurred... 4,840 Undrw expenses incurred 17,968 LAE & undrw expenses paid 22,114 underwriting income 3,833 Undrw cash flow... 17,072 investment income... 8,009 Investment income... 5,756 Pre-tax oper income... 11,842 Pre-tax cash operations 22,829 Realized capital gains... 40,090 Income taxes incurred... -9,593 Income taxes pd (recov) income... 61,526 oper cash flow... 22,383 Why is this Best s Rating Report important to you? A Best s Rating Report from the A.M. Best Company showcases the opinion from the leading provider of insurer ratings of a company s financial strength and ability to meet its obligations to policyholders, as well as its relative credit risk. The A.M. Best Company is the oldest, most experienced rating agency in the world and has been reporting on the financial condition of the insurance companies since A Best s Financial Strength Rating is an independent opinion of an insurer s financial strength and ability to meet its ongoing insurance policy and contract obligations. The Financial Strength Rating opinion addresses the relative ability of an insurer to meet its ongoing insurance policy and contract obligations. The rating is not assigned to specific insurance policies or contracts and does not address any other risk, including, but not limited to, an insurer s claims-payment policies or procedures; the ability of the insurer to dispute or deny claims payment on grounds of misrepresentation or fraud; or any specific liability contractually borne by the policy or contract holder. The rating is not a recommendation to purchase, hold or terminate any insurance policy, contract or any other financial obligation issued by an insurer, nor does it address the suitability of any particular policy or contract for a specific purpose or purchaser. In arriving at a rating decision, A.M. Best relies on third-party audited financial data and/or other information provided to it. While this information is believed to be reliable, A.M. Best does not independently verify the accuracy or reliability of the information. The company information appearing in this pamphlet is an extract from the complete company report prepared by the A.M. Best Company or A.M. Best Europe Rating Services Limited. For the latest Best s Financial Strength Ratings along with their definitions and A.M. Best s Terms of Use, visit the A.M. Best website at You may also obtain AMB Credit Reports by visiting our site or calling our Customer Service department at , ext To expedite your request, please provide the company s identification number (AMB#) A.M. Best Company, Oldwick, NJ Printed June 20, Page 7 of 7