AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings of “a” of Dallas-based National Lloyds Insurance Co. (NLIC) and American Summit Insurance Co. (ASIC), collectively referred to as National Lloyds Group.
The ratings outlook for the companies is stable.
The ratings reflect the National Lloyds Group’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The rating actions follow Hilltop Holdings Inc.’s recently finalized sale of its wholly owned subsidiary, National Lloyds Corp., an intermediate insurance holding company that owns NLIC and ASIC, to ReAlign Insurance Holdings LLC a new insurance holding company formed by ReAlign Capital Strategies LLC and private investors.
The rating actions also consider the subsequent execution of an intercompany pooling agreement between the operating entities.
The balance sheet strength assessment considers the change in ownership, updated dividend plan and the execution risk related to adding commercial auto and commercial property business to the NLIC and ASIC pool.
Align Financial Holdings LLC, an affiliated program administrator with extensive experience underwriting profitable program business, will produce the new business.
The operating performance assessment considers NLIC and ASIC’s favorable, but volatile, five-year average total return measures that are driven by frequent and severe weather-related events, a reflection of geographic concentration of the current book of business.
This factor will be mitigated by the renewed emphasis on limited geographic and product expansion in 2021.
Source: AM Best
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