A.M. Best Downgrades Ratings of Dallas National Insurance
A.M. Best Co. has downgraded the financial strength rating to B (Fair) from B++ (Good) and issuer credit rating to “bb” from “bbb” of Dallas National Insurance Co. (DNIC) in Dallas, Texas. The outlook for both ratings is negative.
The rating downgrades reflect DNIC’s current and projected vulnerable level of risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR), which is driven by rapid growth in premium and reserves that is well in excess of management’s projections previously shared with A.M. Best.
The maintaining of DNIC’s negative outlook reflects the risks associated with this growth, which includes new state and product expansion, additional reliance on third parties to source and service this business and the potential for continued deterioration in risk-adjusted capital and operating performance.
A.M. Best remains concerned with the risks associated with DNIC’s current and projected expansion efforts, the true profitability of its current book of business, as well as the recent deterioration in operating performance, all of which may further strain overall capitalization.
Source: A.M. Best
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