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|Source:||A.M. Best Company, Inc.|
The ratings reflect C.P.A.’s change in ownership during 2009 as well as the replacement of its management team. Other positive rating factors are C.P.A.’s low underwriting leverage and well defined niche market, providing railroad workers’ job loss insurance for over 100 years. C.P.A. also has very strong capitalization as measured by its high Best’s Capital Adequacy Ratio.
These positive rating factors are offset by C.P.A.’s significant ownership interest in
The positive outlook recognizes C.P.A.’s low underwriting leverage and A.M. Best’s expectation of improved underwriting performance through its focus on achieving expense efficiencies while prudently growing its premium base. The new ownership plan is for C.P.A. to expand into other lines of business as it obtains a full property/casualty license and gains admission into additional states. C.P.A. plans on reinsuring most or all of the new risks, resulting in high ceded leverage and elevated credit risk.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology — Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies” and “Understanding Universal BCAR.” Methodologies can be found at http://www.ambest.com/ratings/methodology.