A.M. Best Co. reiterated the Issuer Credit Rating (ICR) of 'a'
). Concurrently, the rating agency reiterated the financial
strength rating (FSR) of A+ (Superior) and ICR of "aa" of the
affiliates of RLI. It also reiterated the debt rating of "a" on
$100 million 5.95% senior unsecured notes due 2014.
GLOBAL INDEMNTY (GBLI): Free Stock Analysis
HOMEOWNERS CHCE (HCI): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis
RLI CORP (RLI): Free Stock Analysis Report
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The ratings carry a stable outlook.
The rating affirmations account for the company's continued
improved operational performances, dominant market position with
a distinctive product portfolio and sturdy capitalization. RLI
Corp. could maintain a solid performance profile attributable to
its focus on niche market that shield it from vicissitudes of
conventional property/casualty market cycle. The ratings also
account for moderate financial leverage and strong fixed charge
coverage as well as financial support provided by the parent
However, earnings exposure to fluctuations in financial markets
coupled with above average equity leverage dwarf the positives.
Moreover, A.M. Best reiterated the he FSR of A+ (Superior) and
ICR of "aa-" of Contractors Bonding and Insurance Company (CBIC)
with a stable outlook. CBIC is a subsidiary of RLI Corp. that the
company acquired in Apr 2011.
The ratings reflect the advantages CBIC enjoys being a part of
RLI Corp. besides solid capitalization, sustained operating and
underwriting growth profile and proven proficiency in the surety
and small contractor market. However, restricted business profile
and weak macro environment weighing on the profitability mute the
positives to some extent.
Rating affirmations or upgrades from credit rating agencies play
an important part in retaining investor confidence on the stock
as well as maintaining credit worthiness in the market. Rating
downgrades, therefore, adversely affect the business, apart from
increasing the costs of future debt issuances.
Though there are remote chances of rating upgrades in the near
term, erosion of capitalization and declining underwriting
performances might subject the ratings to downgrade.
We believe that strong ratings will help RLI Corp. retain
investor confidence and help it write more businesses going
forward, thereby boosting results.
Recently, the rating agency avowed the ICR of "bbb" of
Global Indemnity plc
). Concurrently, the rating agency reiterated the FSR of A
(Excellent) and ICR of "a" of Wind River Reinsurance Company,
Ltd. and its U.S. subsidiaries. Wind River is the subsidiary of
Global Indemnity. These ratings carry a stable outlook.
RLI Corp. currently carries a Zacks Rank #3 (Hold). Property and
HCI Group, Inc
Montpelier Re Holdings Ltd
) among others, carry a Zacks Rank #1(Strong Buy) and appear