AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of National Unity Insurance Company (National Unity) (San Antonio, TX).
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The Credit Ratings (ratings) reflect National Unity’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
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The positive outlooks reflect National Unity’s trend of improved operating results resulting from underwriting initiatives that have stabilized results over the past four years. These initiatives predominantly consist of refocusing on the niche product offering, which is non-resident auto liability coverage for residents of Mexico and commercial auto liability for truck drivers traveling into the United States and exiting the domestic non-standard auto line of business. The five-year average pre-tax and total return on equity compare favorably with the composite average due to the improvement in loss ratio, as well as investment income. However, the company maintains an elevated underwriting expense ratio driven mostly by higher commission expense, which somewhat offsets the lower loss and loss ratio. A potential future rating upgrade in the operating performance assessment is contingent upon a continuation of current operating results while maintaining or improving the company’s current balance sheet metrics.
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