AM Best has downgraded the financial strength rating of the National Contractors Insurance Company following the erosion in policyholders’ surplus and risk-adjusted capitalization through the third quarter of 2013. The surplus decline is attributable to a single claim, which fell outside of NCIC’s reinsurance program.
The financial strength of the company had been downgraded to B- (Fair) from B (Fair) and issuer credit rating to “bb-” from “bb”.
The outlook for both ratings is negative. Concurrently, AM Best has withdrawn the ratings as the company has requested to no longer participate in AM Best’s interactive rating process.
Although the company expects the claim to be resolved in its favour, the effect of a single large claim on NCIC’s capitalization reflects the vulnerability of its overall financial position.
