AM Best Affirms Credit Ratings of Donegal Insurance Group Members and Donegal Group Inc.
The ratings reflect Donegal Group’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
Donegal Group’s balance sheet strength assessment reflects its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), stabilized loss reserving trends, conservative investment portfolio, a comprehensive reinsurance program and sound liquidity position. These factors are offset partially by elevated underwriting leverage and a modest stockholders’ dividend obligation.
Although the individual members within
Donegal Group’s adequate operating performance assessment reflects volatile net underwriting results in recent years, largely driven by severe weather-related losses, inflationary pressures and supply chain disruptions, namely in 2021, 2022 and to a smaller degree in 2023 with a widespread impact across the industry. Overall, the group’s five-year combined ratio average slightly lags the property/casualty insurance industry’s composite average but is in line with its 10-year combined ratio on an average basis. Management has instituted a series of profitability initiatives in recent years to improve the group’s underwriting performance, including significant rate actions, the transfer of unprofitable accounts and investing in new technology.
Donegal Group’s neutral business profile assessment reflects its geographic and product line diversification, effective use of technology in the independent agency distribution channel, and a history of successful expansion through strategic acquisitions and affiliations.
Donegal Group’s appropriate ERM is demonstrated through a formal risk management process, which provides assurances that the organization’s key compliance, financial and operational risks are addressed in meeting organizational objectives. Additionally,
The FSR of A (Excellent) and the Long Term ICRs of “a” (Excellent) have been affirmed, with stable outlooks for the following members of
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Atlantic States Insurance Company -
Donegal Mutual Insurance Company -
Michigan Insurance Company -
Mountain States Commercial Insurance Company -
Mountain States Indemnity Company -
Peninsula Indemnity Company -
Peninsula Insurance Company -
Southern Insurance Company of Virginia -
Southern Mutual Insurance Company
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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Source: AM Best