AM Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” (Excellent) from “a-” (Excellent) of Indemnity National Insurance Company (INIC) (Jackson, MS). In addition, AM Best has revised the Credit Rating (rating) outlooks to stable from positive.

These ratings reflect INIC’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

The ratings upgrade reflects INIC’s sustained positive operating results over the past five years, which have continued throughout 2024, mainly driven by strong underwriting results and growing investment earnings. The favorable underwriting results are primarily due to management’s strategic focus on profitability measures such as agency management and premium growth initiatives. Following a change in ownership in the second-half of 2017, new bonding opportunities were identified. As a result, the company’s operating performance improved significantly. Increasing net investment income and a positive combined ratio trends in recent years have resulted in INIC comparing more in-line to peers with a strong operating performance assessment. The company’s return on equity and revenue ratios, as well as combined and operating ratios, are solid and track closely with the composite averages on a five- and 10-year basis. In addition, operating metrics such as combined and operating ratios compare favorably relative with AM Best’s small surety & fidelity composite.

INIC’s balance sheet strength assessment of very strong reflects its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Additional factors are the company’s consistent surplus growth in recent years, largely driven by profitable underwriting results and supplemented by a steady flow of investment earnings; a high-quality, well-diversified investment portfolio weighted towards fixed-income securities; stable loss reserving trends as reflected by consistently favorable loss reserve developments over the long term; and a comprehensive reinsurance program with strong partners.

INIC’s limited business profile reflects its product concentration that consists of predominantly premium writings derived from commercial surety bonding products and some umbrella/excess liability policies. The company’s concentration in new geographic areas has expanded in recent years.

INIC’s ERM assessment of appropriate is demonstrated by its adherence to strong corporate governance practices through regular engagement with the company’s board. In addition, the company’s audit and risk committees provide oversight of critical operational controls. Furthermore, management has a strong knowledge of surety underwriting risks. Overall, the company’s ERM framework shows risk management capabilities that are aligned with the company’s risk profile.

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