The outlook revision to positive reflects A.M. Bestís view that First Guardís strong risk-adjusted capitalization, supported by low underwriting and investment leverage, consistently strong underwriting performance and conservative underwriting discipline, will continue, and if so, positive rating action will likely occur in the medium term. The ratings also reflect the companyís expertise in the trucking physical damage market segment, targeting leased owner-operators. Partially offsetting these positive rating factors are First Guardís narrow product focus within the commercial automobile line of business and below average investment yields.
Factors that may lead to positive rating actions include a continued trend of above average underwriting and operating profitability, while maintaining strong risk-adjusted capitalization. Factors that could lead to negative rating actions include a sustained weakening in operating earnings due to deterioration in underwriting performance and/or material weakening in overall capitalization.
The methodology used in determining these ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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