AM Best has revised the outlook to ‘negative’ from 'stable’ for the long-term issuer credit ratings of CSAA Insurance Group’s members. They include CSAA Insurance Exchange and its pooled subsidiaries and reinsured affiliates. The agency also affirms the financial strength rating of ‘A’ (Excellent) and the long-term issuer credit ratings of ‘a+’ (Excellent) for those companies. The outlook for the financial strength rating is ‘stable’. The revision of the outlook to ‘negative’ is driven by the group’s reduction in capital level, which resulted in lower risk-adjusted capitalisation and underwriting leverage deterioration. The capital drop was driven by much higher than anticipated claims cost and material reserve strengthening. CSAA is working on several capital-bolstering initiatives that, if implemented, can restore risk-adjusted capitalisation measures closer to historical levels. On the other hand, AM Best assesses the group’s balance sheet strength as ‘strongest’, as well as its favourable business profile and appropriate enterprise risk management.
