A.M. Best Affirms Ratings of Members of Nonprofits Insurance Alliance Group
A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a” of the members of Nonprofits Insurance Alliance Group (NIAG). The ratings apply to Alliance of Nonprofits for Insurance, Risk Retention Group (ANI) and National Alliance of Nonprofits for Insurance (NANI) (both domiciled in Montpelier, VT) and Nonprofits' Insurance Alliance of California (NIAC) (Santa Cruz, CA). The outlook for all ratings is stable.
The ratings recognize the group's excellent capitalization and operating performance, its strong management and effective niche market strategy. The ratings also consider the benefits derived and the companies' strategic roles within, including the national platform provided by ANI, which is controlled, not owned, by NIAG. A.M. Best considers that ANI, NANI and NIAC function as a group, with the common mission of serving nonprofit organizations through common management (human resources, information technology and administration), underwriting, marketing, claims and risk management services provided by Alliance Member Services. Despite the lack of ownership, A.M. Best expects that the respective boards of directors would act to support all entities within the group. Accordingly, A.M. Best deviated from its “Rating Members of Insurance Groups” rating methodology in regards to the lack of common ownership among the group members.
Partially offsetting these positive rating factors are the companies' limited size and the challenges associated with managing a growing book of business, geographical expansion and establishing market positions in the face of competition.
NIAC and ANI provide a range of liability coverages to 501(c)(3) nonprofit organizations—NIAC in California and ANI in all other states. NANI provides property coverages for nonprofit organizations insured by ANI and NIAC through a fronting arrangement. Despite significant business growth in the last five years, the companies have been able to maintain conservative leverage measures. The companies' capitalization levels are protected by solid reinsurance protection from a leading global reinsurance group. They also are supported by conservative reserving and investment approaches. In addition, all three benefit from their nonprofit, tax-exempt status and from the experience and success of NIAC, which has a leading market position serving California nonprofits. This success reflects the group's expertise, strong customer focus and commitment to the nonprofit sector, as member retentions are very high.
NIAG's ratings are not expected to be upgraded nor its outlook revised within the next 12-24 months as its operating performance and capital position have already been considered in the ratings process. A.M. Best could downgrade NIAG's ratings and/or revise its outlook if the company's Best's Capital Adequacy Ratio (BCAR) score declines, operating performance and risk profile deteriorate, insured losses deplete capital or significant changes and turnover occur in its management team or risk management controls and tolerances.
A.M. Best remains the leading rating agency of captive insurers rating a wide variety of more than 200 captives in the United States and throughout the world.
For current Best's Credit Ratings and independent data on the captive and alternative insurance market, please visit www.ambest.com/captive.
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. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Rating Members of Insurance Groups”; and “Alternative Risk Transfer (ART).” Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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Fred Eslami, 908-439-2200, ext. 5406
Senior Financial Analyst
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Steven Chirico, CPA, 908-439-2200, ext. 5087
Assistant Vice President
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations