AM Best has downgraded the Financial Strength Rating to C++ (Marginal) from B (Fair) and the Long-Term Issuer Credit Rating to “b” (Marginal) from “bb” (Fair) of The Order of United Commercial Travelers of America (UCT) (Columbus, OH). The outlook of these Credit Ratings (ratings) has been revised to negative from stable. Concurrently, AM Best has withdrawn these ratings as the company has requested to no longer participate in AM Best’s interactive rating process.
The ratings reflect UCT’s balance sheet strength, which AM Best assesses as weak, as well as its weak operating performance, limited business profile and marginal enterprise risk management (ERM).
The rating downgrades reflect significant reserve increases on the year-end 2022 statutory financial statement, as well as trending operating losses and declining net premium written since 2017. The company is expected to hold an even smaller level of overall absolute capital, which together with its limited financial flexibility and lack of diversification, will magnify the impact of unfavorable operating trends on its risk-adjusted capitalization. AM Best notes that there has been an ongoing trend of marginal ERM practices, which have been a contributing rating factor. Further, the company maintains modest market positions in a highly competitive accident and health segment in which many of its competitors enjoy significant scale advantages, which limits UCT’s business profile.
The negative outlooks reflect AM Best’s expectation that the company’s balance sheet and operating performance assessments could weaken further over the intermediate term.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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