A.M. Best has upgraded the financial strength rating to A (Excellent) from B++ (Good) and the issuer credit rating to “a” from “bbb+” of Consumers Insurance USA, Inc. (Consumers) (headquartered in Murfreesboro, TN). The ratings have been removed from under review with positive implications and assigned a negative outlook.
The upgrade of the ratings reflects the addition of Consumers to Motorists Insurance Pool (Motorists), following Consumers’ inclusion in Motorists’ intercompany pooling agreement effective Jan. 1, 2015. Consequently, any direct premiums, losses or expenses of Consumers will be combined with the members of Motorists and pro-rated, based on the members’ respective pooling percentages. Motorists Mutual Insurance Company’s (Motorists Mutual) purchase of Consumers and its intermediate parent, Consumers Insurance Group, Inc., was finalized on Sept. 2, 2014.
Motorists Mutual, the lead company of Motorists, also has provided explicit support in the form of $10 million of contributed capital to Consumers on Oct. 20, 2014, which significantly increased Consumers’ risk-adjusted capitalization. This capital contribution has provided Consumers with a substantial cushion against operating losses, which the company has reported in recent quarters due to deterioration in underwriting results.
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.
Key insurance criteria reports utilized:
- Catastrophe Analysis in A.M. Best Ratings
- Insurance Holding Company and Debt Ratings
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
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 visit A.M. Best’s Ratings & Criteria Center.
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