A.M. Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of "bb" of Nations Insurance Co. (Nations) (Cerritos, CA).
The Credit Ratings (ratings) of Nations reflect its balance sheet strength, which A.M. Best categorizes as adequate, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.
The revised outlook to stable from negative is based on the recent improvement of Nations' operating performance and risk-adjusted capitalization, driven by increased underwriting earnings and investment income, which led to solid surplus growth. In addition, Nations implemented a 50% quota share reinsurance contract effective Jan. 1, 2017, which significantly reduced its net underwriting leverage. This quota share reinsurance was increased to 60% effective Jan. 1, 2018. Furthermore, Nations has implemented rate increases in recent years, which have enhanced net underwriting income, and increased investment allocation to long-term bonds from short-term investments, which has increased net investment yield and net investment income