A.M. Best Downgrades Ratings of Unique Insurance Company

OLDWICK, N.J.–([1])–A.M. Best has downgraded the financial strength rating (FSR) to
C++ (Marginal) from B- (Fair) and the issuer credit rating (ICR) to “b+”
from “bb-” of Unique Insurance Company (Unique) (Chicago, IL).
The outlook for the FSR has been revised to stable from negative, while
the outlook for the ICR remains negative.

The rating downgrades reflect the continued deterioration of Unique’s
overall risk-adjusted capitalization. While net premium written
decreased by year-end 2015, this was due to an increase in the company’s
quota share agreement, as gross writings and policy count continued to
increase approximately 25% compared with the prior year. As a result of
the growth, incurred losses increased and loss reserves continued to
develop unfavorably. When compared with other private passenger
non-standard automobile writers, all of Unique’s leverage measures are
elevated. The company’s high expense position, driven by commission
costs, also contributes negatively to the company’s profitability.

Partially offsetting these negative rating factors are Unique’s
generally positive operating results. In each of the past five years,
the company has generated positive net income and positive pre-tax and
total returns on revenue and equity. The company’s average pure loss
ratio compares favorably with the industry composite. Unique has added
to surplus in each of the past four years due to a combination of
investment income and fee income that offsets overall underwriting
losses. Nevertheless, overall risk-adjusted capitalization has trended
downward due to the aforementioned growth.

This press release relates to rating(s) that have been published on
A.M. Best’s website.
For all rating information relating 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 A.M. Best’s
Recent
Rating Activity
[2] web page.

A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit
www.ambest.com[3].

Copyright © 2016 by A.M. Best Rating Services, Inc. ALL RIGHTS
RESERVED.

References

  1. ^ (www.businesswire.com)
  2. ^ Recent Rating Activity (cts.businesswire.com)
  3. ^ www.ambest.com (cts.businesswire.com)

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