The ratings reflect GUARD's solid capitalization, favorable operating profitability achieved through disciplined underwriting initiatives, as well as the cautious manner initial claim reserves are established, which has resulted in favorable reserve development in recent years. The ratings also acknowledge the implicit and explicit financial support provided by GUARD's ultimate parent,
Partially offsetting these positive rating factors are the group's above-average growth over the past several years and the inherent risks associated with integrating new product lines and expanding into new states, which is compounded by the current soft underwriting cycle, generally weak macroeconomic conditions and a degree of concentration in several states and significant production sources. Also, the group's net investment ratio is below the workers' compensation composite and comparably rated peers. Despite these concerns, the outlook reflects GUARD's enhanced financial flexibility provided by Berkshire, strong balance sheet and historical underwriting profitability.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of
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