A.M. Best Co. has affirmed the financial strength ratings (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” for State Auto Insurance Companies (State Auto) (Columbus, OH). A.M. Best has also affirmed the debt rating of “a-” on the $100 million 6.25% senior unsecured notes issued by State Auto Financial Corporation (NASDAQ: STFC) (Columbus, OH) and its ICR of “a-“. The outlook for all ratings remains stable.
The ratings reflect State Auto’s strong capitalization, favorable earnings trend and excellent regional market franchise. These attributes reflect its long-standing market presence, well-established agency relationships, diversified product offerings and adherence to sound underwriting fundamentals.
Somewhat offsetting these positive rating factors include variability in operating results, which is reflective of weather-related losses as storm loss frequency and severity have trended higher in recent years. In addition, the group has debt servicing requirements due to the above mentioned debt issuance, which could put a strain on future earnings. However, State Auto implemented numerous initiatives to improve earnings that included re-underwriting, pricing adjustments and agency management actions. As a result of these actions, firm market conditions and the recent improvement in loss reserve development related to the Meridian business, State Auto has reported favorable operating results during the past three years.
The FSRs of A+ (Superior) have been affirmed and ICRs of “aa-” have been assigned with a stable outlook for the following members of State Auto Insurance Companies:
— State Auto Florida Insurance Company
— Farmers Casualty Insurance Company
— Milbank Insurance Company
— State Auto Property and Casualty Insurance Company
— State Auto Insurance Company of Wisconsin
— State Auto National Insurance Company
— State Automobile Mutual Insurance Company
— State Auto Insurance Company of Ohio
— Meridian Citizens Mutual Insurance Company
— Meridian Security Insurance Company
The following debt rating has been affirmed with a stable outlook:
State Auto Financial Corporation–
— “a-” on $100 million 6.25% senior unsecured notes, due 2013
For Best’s Debt Ratings, all other Best’s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.
A.M. Best Co., established in 1899, is the world’s oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best’s Web site at www.ambest.com.