OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best has upgraded the issuer credit rating (ICR)to
"aa" from "aa-" and affirmed the financial strength rating (FSR) of A+
(Superior) of Contractors Bonding and Insurance Company (CBIC)
(Seattle, WA), a member of the RLI Group ( RLI ).
In addition, A.M. Best has affirmed the FSR of A+ (Superior) and the
ICRs of "aa" of the remaining members of RLI. A.M. Best also has
affirmed the ICR of "a" and debt rating of "a" on $150 million 4.875%
senior unsecured notes due 2023 of RLI's publicly traded parent holding
company, RLI Corp. [NYSE: RLI]. The outlook for all ratings is
stable. All companies are domiciled in Peoria, IL, unless otherwise
specified. (See below for a detailed listing of the companies and
The upgrading of the ICR of CBIC reflects the strategic importance the
company provides to RLI by offering another admitted product platform
for rate flexibility and product diversification as well as through the
expansion of RLI's geographic footprint in the northwest/western portion
of the United States, which provides access to a new network of
producers. The integration of the management and technology platforms
has essentially been completed and products can now be cross-sold within
RLI. The ratings also acknowledge CBIC's strong stand-alone
risk-adjusted capitalization and historically profitable operating and
underwriting results. A.M. Best expects that CBIC will remain essential
to RLI's core operations and provide implicit and/or explicit support in
the future should it be warranted.
The rating affirmations take into consideration RLI Corp.'s solid 2013
financial results and favorable first quarter 2014 earnings
announcement. The ratings also reflect RLI's superior capitalization,
sustained long-term operating profitability and excellent business
profile as one of the leading specialty property/casualty insurance
organizations in the United States. RLI has been able to maintain its
focus in disciplined niche underwriting by concentrating on markets that
are often underserved, which help to somewhat insulate it from the
various stages of the traditional property/casualty market cycle. The
ratings acknowledge the strong financial flexibility afforded by RLI
Corp., as evidenced by its modest financial leverage and strong fixed
Partially offsetting these positive rating factors is RLI's above
average equity leverage, which could potentially lead to earnings
volatility in more turbulent financial market conditions.
A.M. Best believes that RLI is well positioned at its current rating
level. Key rating drivers that could lead to downward rating pressures
is a deterioration in RLI's underwriting performance and/or a
significant decline in its risk-adjusted capitalization.
The FSR of A+ (Superior) and ICRs of "aa" have been affirmed for the
following members of RLI Group:
- Mt. Hawley Insurance Company
- RLI Indemnity Company
- RLI Insurance Company
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc.ALL RIGHTS
Source: A.M. Best