OLDWICK, N.J., January 17, 2018—A.M. Best has affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” of National General Insurance Corporation (NAGICO) N.V. (National General) (St. Maarten) and Nagico Insurance Company Limited (Anguilla), collectively referred to as NAGICO. The outlook of the FSR remains stable, while the outlook of the Long-Term ICR remains positive.

The Credit Ratings (ratings) reflect NAGICO’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

NAGICO’s balance sheet strength is underpinned by its risk-adjusted capitalization assessed at the strongest level, generally overall positive operating earnings and geographic spread of risk throughout the Caribbean. Additional positive rating factors include a comprehensive reinsurance program with quality partners, as well as an ERM program that identifies and effectively manages its underwriting, investment and operational risks. Furthermore, the partnership with Peak Reinsurance Company Limited (Peak Re) is expected to produce additional growth opportunities for NAGICO, as well as provide it with greater capital support and better asset and investment management capabilities.

Partially offsetting these positive rating factors are a weakening of risk-adjusted capitalization and loss of shareholders’ equity in 2017 as a result of losses incurred from Hurricanes Irma and Maria, as well as the soft, highly competitive markets and weak economies throughout the Caribbean. The group’s earnings have generally been positive, despite being lower than most other Caribbean property/casualty insurers that A.M. Best rates. Additionally, NAGICO, like other Caribbean insurers, has significant exposure to catastrophe losses from severe weather-related events. These risks are managed through the utilization of reinsurance to limit their catastrophe exposure to an acceptable risk tolerance level, which effectively protects their surplus.

Peak Re’s 50% acquisition of NAGICO’s ultimate parent, Nagico Holdings Limited in late 2016 coincided with additional reinsurance support from Peak Re. Management believes this transaction will provide NAGICO with more growth, investment and asset management opportunities. A.M. Best will continue to monitor the impact this transaction will have on NAGICO’s operations and future business development.

The positive outlook of the Long-Term ICR reflects the potential for upward movement in the next 12 to 24 months due to anticipation of continued positive factors including sustained improvement in NAGICO’s underwriting performance, stabilized risk-adjusted capitalization at both operating companies, and consistent long-term overall profitability. Factors that might lead to negative rating action include sustained decline in underwriting profitability, material deterioration in risk-adjusted capitalization from outsized catastrophe losses, or a downgrade in the country risk tier ratings of St. Maarten or Anguilla.

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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