A.M. Best: Ratings Outlooks Negative for Texas-Based Standard Casualty

A.M. Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Standard Casualty Co. (Standard Casualty), based in New Braunfels, Texas.

Standard Casualty is a subsidiary of Cavco Industries Inc. (Cavco), which manufactures and factory built homes.

The Credit Ratings (ratings) reflect Standard Casualty’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The revised outlooks are based on the deterioration in the financial performance of Standard Casualty observed in recent years driven by frequent and severe weather-related losses (hail and hurricane). The most recent three-year period (2014-2017) produced unfavorable underwriting results, which have put downward pressure on Standard Casualty’s five-year average pre-tax returns on revenue and equity measures, which lag the personal property composite.

These negative rating factors are somewhat offset by Standard Casualty’s very strong balance sheet strength, vertical integration with its parent’s factory built home business, history of capital contributions from Cavco, local market knowledge and continued geographic diversification into New Mexico and Arizona markets.

Source: A.M. Best