P.R. insurance commissioner intervenes with National Insurance Company’s operations
A month after insurance rating agency A.M. Best Co. downgraded National Insurance Company’s financial standing, the Office of the Puerto Rico Insurance Commissioner has stepped in to intervene with the insurance provider’s operations.
The company, a member of the National Financial Group, is reportedly in talks to bring in an investor to boost its performance, which has been weakened by a number of factors: ongoing poor operating performance inclusive of adverse reserve development, an increase in non-admitted assets driven by uncollected premium balances and a reduction in NIC’s carrying value, A.M. Best said.
“The impact of these adjustments collectively resulted in a significant decline in NIC’s consolidated policyholder surplus during the fourth quarter of 2010,” the agency further noted.
Attempts to reach Insurance Commissioner Ramón Cruz were unsuccessful late Tuesday. As a result, it remained unclear late Tuesday what specific action the regulator took against the ailing insurer. Cruz worked at NIC from 2001 to 2007, and spent a portion of that tenure as company president.
The 50-year-old operation received bad scores all around from the New Jersey-based agency, which downgraded NFG’s financial strength rating to B- (Fair) from B+ (Good) and its issuer credit ratings to “bb-” from “bbb-.” That latter downgrade also applied to subsidiary National Insurance Company and National Group Insurance Company, operating in Coral Gables since 2004.
A.M. Best also downgraded NIC’s financial strength rating to B- (Fair) from B+ (Good) and the issuer credit ratings to “bb-” from “bbb-.”
“All three companies operate as National Financial Group, and all ratings have been placed under review with negative implications,” A.M. Best said in a report released April 18.
Carlos M. Benítez founded National Insurance Company in 1961 and it has been family-run for two generations.
“While management has implemented initiatives intended to improve operating performance and capitalization, the ratings have been placed under review until A.M. Best has met with management and concluded its analysis on the impact of these initiatives on the companies,” the reputable credit rating agency added.
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