A.M. Best Co. has downgraded the financial strength rating (FSR) to B (Fair) from B+ (Good) and issuer credit rating (ICR) to "bb+" from "bbb-" of American Access Casualty Company (AACC)( Chicago, IL ). The outlooks for both ratings are stable. The rating actions reflect the decline in AACC's policyholders' surplus and risk-adjusted capitalization, due to a significant decline in operating profitability, a dividend payment in 2013 and significant premium and exposure growth that led to unfavorable underwriting leverage measures compared with the Non-Standard Auto Composite. Furthermore, adverse loss reserve development over the most recent three-year period, caused by increased bodily injury losses in Arizona , Illinois and Nevada , contributed to the recent significant underwriting losses and decline in risk-adjusted capitalization. However, somewhat offsetting this decline in risk-adjusted capitalization is AACC's prior track record in generating underwriting profitability and management's initiatives to address pricing and reserve issues, moderate premium growth and curtail the 2014 dividend to its parent, American Access Group, LLC . Further negative rating actions may be taken if there is a continued decline in policyholders' surplus and risk-adjusted capitalization as a result of operating losses and/or unplanned premium and exposure growth. Positive rating actions may occur over the intermediate term if premium growth moderates, supported by sufficient capital, and operating profitability is restored to prior- year levels. The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology: ambest.com/ratings/methodology . A.M. Best Company is an insurance rating and information source. ((Comments on this story may be sent to email@example.com ))
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