A.M. Best reiterated the issuer credit rating (ICR) of "bbb+" of
National Interstate Corporation
. Concurrently, the rating agency maintained the financial strength
rating (FSR) of A (Excellent) and the ICR of "a+" of the unit
National Interstate Insurance Company and its affiliates - National
Interstate Insurance Company of Hawaii, Inc.,Triumphe Casualty
Company and Vanliner Insurance Company. The ratings carry a stable
outlook, revised from a positive outlook.
The ratings' affirmations came on the back of sustained solid
operating performance which outpaced the commercial automobile peer
group; sturdy risk-adjusted capitalization driven by strong
underwriting profits and expertise within its niche transportation
market. The results benefitted from focus on rate integrity,
efficient claims management and effectively segmenting risks.
Moreover, National Interstate Corp. enjoys a competitive advantage
due to its focus on providing alternative risk transfer programs
for the specialty transportation segment. This in turn helps the
company to experience high policyholder retention rates riding on
favorable pricing, claims adjustments and loss control. Financial
support rendered by the parent company also helps in rating
However, business limited within the passenger and truck
transportation industries, poor underwriting performance due to a
number of unrelated severe loss events during 2013, escalated
claims severity and unfavorable reserve development in the
commercial auto line in 2014 weighed on the positives.
A.M. best stated that National Interstate Corp. may witnesses a
rating upgrade if its underwriting and operating results improve or
if it outperforms its peers while maintains a sturdy risk-adjusted
capitalization. However, negative rating actions may follow if
operational results deteriorate or risk-adjusted capitalization
Rating affirmations or upgrades from credit rating agencies play an
important part in retaining investor confidence in the stock as
well as in maintaining credit worthiness in the market. On the
other hand, rating downgrades damage business, apart from
increasing costs of future debt issuances. We believe that strong
ratings will help National Interstate retain investor confidence
and help it in writing more businesses going forward.
National Interstate Corp. carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked property and casualty insurers are
AmTrustFinancial Services, Inc.
, Allied World Assurance Company Holdings AG
and Arch Capital Group Ltd.
. All these stocks sport a Zacks Rank #1 (Strong Buy).
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