AM Best has revised the outlooks to stable from positive and affirmed the Financial Strength Rating of C++ (Marginal) and the Long-Term Issuer Credit Rating of “b+” (Marginal) of Country-Wide Insurance Company (Country-Wide) (New York, NY).

The Credit Ratings (ratings) reflect Country-Wide’s balance sheet strength, which AM Best assesses as weak, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).

The outlook revisions for Country-Wide reflect a change in its risk-adjusted capitalization assessment level to adequate from very strong, as measured by Best’s Capital Adequacy Ratio (BCAR), mainly due to significant surplus erosion that led to a capital decline, as well as ongoing difficulty in adequately setting reserves. Reserves, which continue to develop adversely, were strengthened by $10 million in 2021, leading to the 25% surplus erosion. Additionally, Country-Wide has elevated net and gross underwriting leverage measures, reflective of high reinsurance dependence.

Surplus erosion continued through the first quarter of 2022 due to the termination of the company’s 15% quota share treaty. Country-Wide continues to refine their risk appetite by removing unprofitable and non-standard business. Management has implemented a number of corrective actions to improve performance, including rate increases and non-renewal of undesirable risks that impact profitability. To offset the exit of undesirable business, Country-Wide is generating more business from their core brokers that generate better loss results with lower average loss costs. Production from these brokers continues to increase year over year. Prior to 2021, results were showing signs of improvement due to a formalized and continually evolving ERM.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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