BEDFORD, Texas, Aug. 26, 2016 (GLOBE NEWSWIRE) -- State National Companies, Inc. (NASDAQ:SNC) today announced that A.M. Best A.M. Best has revised the issuer credit rating (ICR) outlook to positive from stable and affirmed the financial strength rating (FSR) of A (Excellent) and the ICRs of “a” of State National Insurance Company, Inc. and its subsidiaries, National Specialty Insurance Company and United Specialty Insurance Company, which operate under a pooling agreement and are collectively referred to as State National Group (State National). The outlook for the FSR remains stable.
A.M. Best stated the following in a press release dated August 25, 2016:
The revised ICR outlook reflects State National’s strong risk-adjusted capitalization, extended history of sustained operating profitability driven by its core collateral protection insurance business and dominant market position providing fronting services. Additional favorable rating factors include the group’s extensive enterprise risk management programs tailored to its business model and capability managing collateralized counter-party relationships.
These positive rating factors are partially tempered by the elevated ceded leverage from the extensive use of reinsurance. This risk is somewhat mitigated by the long-standing and successful process to maintain collateral to support recoverable amounts. Furthermore, this risk is controlled by indemnification agreements contained within the reinsurance contracts. In recent years, the program business has grown significantly, and this portfolio includes participation from third-party capital providers.
The ratings of State National Companies are based on its role as the ultimate parent holding company of State National. As of Dec. 31, 2015, debt-to-capital and debt-to-tangible capital ratios (excluding other comprehensive income/loss) were 14.5% and 14.8%, respectively. Furthermore, interest coverage and cash flow for the parent is exceptionally strong.
The ratings of State National and State National Companies could receive positive support from improved operating results or further advancements in overall profitability. Key factors that could result in negative rating action include a significant decline in stand-alone risk-adjusted capitalization, operating performance over a sustained period that does not meet A.M. Best’s expectations, significant adjustments to the organization's business model, including provisions in the reinsurance treaties, or a dispute regarding reinsurance recoverable amounts.
About State National Companies, Inc.
State National Companies, Inc. (NASDAQ:SNC) is a leading specialty provider of property and casualty insurance services operating in two niche markets across the United States. In its Lender Services segment, the Company specializes in providing collateral protection insurance, which insures personal automobiles and other vehicles held as collateral for loans made by credit unions, banks and specialty finance companies. In its Program Services segment, the Company leverages its “A” (Excellent) A.M. Best rating, expansive licenses and reputation to provide access to the U.S. property and casualty insurance market in exchange for ceding fees. To learn more, please visit www.statenational.com. State National routinely posts important Company information on its website.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Various statements contained in this press release are forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. Our forward-looking statements are generally, but not always, accompanied by words such as “estimate,” “believe,” “expect,” “will,” “plan,” “target,” “could” or other words that convey the uncertainty of future events or outcomes.
There can be no assurance that actual developments will be those anticipated by us. Actual results may differ materially from those expressed or implied in these statements as a result of significant risks and uncertainties, including, but not limited to, our ability to recover from our capacity providers, the cost and availability of reinsurance coverage, challenges to our use of issuing carrier or fronting arrangements by regulators or changes in state or federal insurance or other statutes or regulations, our dependence on a limited number of business partners, potential regulatory scrutiny of collateral protection insurance, level of new car sales, availability of credit for vehicle purchases and other factors affecting automobile financing, our ability to compete effectively, a downgrade in the financial strength ratings of our insurance subsidiaries, our ability to accurately underwrite and price our products and to maintain and establish accurate loss reserves, changes in interest rates or other changes in the financial markets, the effects of emerging claim and coverage issues, changes in the demand for our products, the effect of general economic conditions, breaches in data security or other disruptions with our technology, and changes in pricing or other competitive environments.
Forward-looking statements involve inherent risks and uncertainties that are difficult to predict, many of which are beyond our control. Additional information about these risks and uncertainties is contained in our filings with the Securities and Exchange Commission. The forward-looking statements in this press release speak only as of the date of this release, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
CONTACTS: State National Companies, Inc. David Hale, COO & CFO 817-265-2000 Dennard ▪ Lascar Associates Rick Black 713-529-6600
Source:State National Companies