OLDWICK, NJ–(BUSINESS WIRE)–AM Best Affirmed Financial Strength Rating of A (Excellent) and Issuer Long-Term Credit Rating of “a” (Excellent) from Protective Property & Casualty Insurance Company (Protective P&C) (St. Louis, MO). The outlook for these Credit Ratings (ratings) is stable.
The ratings reflect Protective P&C’s balance sheet strength, which AM Best assesses as very strong, as well as adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings also reflect the upgraded rating of its parent company, Protective Life Insurance Company (Protective Life).
Protective P&C’s balance sheet strength rating is supported by the highest level of risk-adjusted capitalization as measured by Best’s capital adequacy ratio (BCAR), good asset quality, balance sheet and an annual organic growth of the surplus derived from profits, which is partially compensated by annual dividends to the parent company. Balance sheet strength is somewhat undermined by Protective P&C’s extensive use of unrated reinsurance arrangements held by dealers. AM Best considers the company’s operating performance to be adequate based on its consistent track record of profitability, with performance measures and underwriting ratios remaining on par with its composite group of warranty insurer peers.
Protective P&C specializes in coverage for vehicle maintenance contracts and guaranteed asset protection products for automobiles, boats, powersports vehicles and recreational vehicles, sold primarily through franchise dealers and independent agents. The neutral business profile reflects the company’s concentration of underwriting risk in the highly competitive auto warranty market, offset by its geographic diversification. The company’s ERM is tailored to its risk profile and is integrated with that of its parent company, Protective Life.
An upgrade in rating was given to Protective P&C due to the implicit support of its higher rated parent company, its integration into the organization and its support for the organization’s asset protection strategy.
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