Recently, A.M. Best Co. affirmed the financial strength rating
(FSR) of Allstate New Jersey Insurance Group - a subsidiary of
) - at "A-" and its issuer credit ratings (ICR) at "a-." Both
ratings carry a stable outlook.
Allstate New Jersey's sufficient adequate risk-adjusted
capitalization and management's understanding of the local market
prompted A.M. Best to affirm the ratings. Moreover, the company
is constantly striving to boost its operating results. The
company's proficiency in adapting to the changing market
conditions helps it achieve this aim.
Moreover, the recent rate changes, new criteria for business
acceptance and changes in the renewal books have boosted the
margins in Allstate New Jersey's private passenger automobile
business. Further, the company is aiming at improving its
homeowners' business line and bringing pricing at par with risk
through various actions such as rate increases, targeted
inspections of clients and properties and cutback in exposure to
A.M. Best's ratings also consider the operational and
financial advantages received by Allstate New Jersey as a result
of being a subsidiary of a leading U.S. insurance company.
However, these positive attributes are partially offset by a few
negatives, the most prominent being the lack of geographic
The company has operations solely in N.J., which increases the
catastrophe loss risk in case of adverse weather-related events
in the state. The geographic concentration also exposes the
company to significant competition and regulatory
In order to deal with this volatility, Allstate New Jersey did
not pay dividends in the past few years and has tried to maintain
moderate risk in its investment portfolio. While the stable
outlook on the ratings indicates a low possibility of rating
change in the near future, A.M. Best can downgrade the ratings if
the underwriting performance and capitalization levels
deteriorate significantly below expectation.
Allstate New Jersey manages Allstate's entire New Jersey
property and casualty business. It is the holding company for
Allstate New Jersey Insurance Company, Allstate New Jersey
Property and Casualty Insurance Company, Encompass Insurance
Company of New Jersey, Encompass Property and Casualty Insurance
Company of New Jersey and Esurance Insurance Company of New
Allstate currently carries a Zacks Rank #2 (Buy). Other
property and casualty insurers worth considering are
AmTrust Financial Services, Inc. (
Fidelity National Financial, Inc.
Cincinnati Financial Corp.
). All these companies carry a Zacks Rank #1 (Strong Buy).
AMTRUST FIN SVC (AFSI): Free Stock Analysis
ALLSTATE CORP (ALL): Free Stock Analysis
CINCINNATI FINL (CINF): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
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