AM Best Upgrades Subsidiaries of New Jersey Manufacturers Insurance
Rating agency AM Best has upgraded the Financial Strength Rating to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit Ratings to “aa” (Superior) from “a” (Excellent) of New Jersey Casualty Insurance Co., New Jersey Indemnity Insurance Co. and New Jersey Reinsurance Co.
The three companies are wholly owned subsidiaries of New Jersey Manufacturers Insurance Co. in West Trenton, New Jersey. AM Best has also affirmed the FSR of A+ (Superior) and Long-Term ICR of “aa” (Superior) of NJM.
The outlook of these credit ratings is stable.
AM Best said the ratings reflect NJM’s balance sheet strength, which AM Best assesses as strongest, as well as its “strong operating performance, favorable business profile and appropriate enterprise risk management.”
The rating upgrades of NJC, NJI and NJRe are a result of NJM’s ratings being extended through a reinsurance contract between NJM and all subsidiaries that went into effect on Jan. 1, 2022.
Over the past five years, policyholder surplus has increased by nearly 55%. Surplus appreciation has been dampened somewhat by an annual dividend paid to policyholders. However, AM Best said, this dividend is part of the group’s capital management strategy and a strong retention tool.
Underwriting leverage measures although somewhat elevated in relation to the AM Best composite of other carriers have improved during this time frame, as surplus gains have outpaced premium expansion, according to the rating agency.
AM Best said operating results “continue to be strong” mainly due to solid performance in the group’s investment portfolio that has generated a steady stream of net investment income, as well as realized and unrealized capital gains. Pre-dividend results are solid; however, overall net underwriting income is impacted by the annual dividend. Somewhat offsetting this is the group’s low underwriting expense structure.
NJM is a market leader in New Jersey, with a large market share in both personal and commercial lines products. At year-end 2021, New Jersey accounted for nearly 94% of all direct premium written. However, the group currently operates in seven states, and an AM Best said it has a strategic plan to continue to improve its geographic diversification.
Founded in 1913, NJM is a regional property/casualty insurer. The company offers auto, homeowners, renters, and umbrella coverage in Connecticut, Maryland, New Jersey, Ohio and Pennsylvania. It sells workers’ compensation policies in Connecticut, Delaware, Maryland, New Jersey, New York, and Pennsylvania and commercial general liability, businessowners, and commercial excess and umbrella insurance in Delaware, Maryland, New Jersey and Pennsylvania. Its commercial auto policies are available in Connecticut, Delaware, Maryland, New Jersey, New York and Pennsylvania.
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