OLDWICK, N. J. –(BUSINESS WIRE)–AM Best has confirmed that the pooled members of Selective Insurance Group (Selective) have a Financial Strength Rating (FSR) of A (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR). Finally, AM Best has confirmed the Long-Term Issue Credit Ratings (Long-Term IR) of “bbb” and the Long-Term Issue Credit Ratings (Long-Term ICR) of the ultimate parent company, Selective Insurance Group, Inc. (SIGI) [NASDAQ: SIGI]. The outlook of these Credit Ratings (ratings) is positive. All companies are headquartered in Branchville, NJ. (Please see below for a detailed listing of companies and ratings. ).
AM Best rates Selective’s balance sheet as “strong,” and these ratings show that the company has good operating performance, a good business profile, and good enterprise risk management.
Best’s Capital Adequacy Ratio (BCAR) shows that Selective’s risk-adjusted capitalization is at the highest level. This is partially due to the company’s exposure to disaster losses and terrorism. The good predictions come from the company’s higher profits over the last five years, both in absolute terms and compared to its competitors. AM Best thinks that the group will keep going with plans and targeted rate hikes to improve the underwriting results in its commercial auto and excess and surplus books of business, which are currently having trouble. Part of the group’s good business reputation comes from its close working relationships with its chosen agencies and its use of technology to improve its underwriting and servicing.
For the pooled members of Selective Insurance Group, the FSR of A (Excellent) and the Long-Term ICRs of “a” have been confirmed:
Selective Insurance Group, Inc. — –“bbb+” on $49. 9 million 7. 25% senior unsecured notes, due 2034 –“bbb+” on $99. 4 million 6. 70% senior unsecured notes, due 2035 –“bbb+” on $294. 2 million 5. 375% senior unsecured notes, due 2049.
Selective Insurance Group, Inc.— –“bbb+” on senior unsecured debt –“bbb” on subordinated debt –“bbb-” on preferred stock
This press release relates to Credit Ratings that have been published on AM Best’s website. Please visit AM Best’s Recent Rating Activity web page for all rating information related to the release and relevant disclosures. This includes information on which office issued each of the ratings mentioned in the release. Guide to Best’s Credit Ratings has more information about how Credit Rating opinions can be used and what they can’t do. Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases has information on how to use Best’s Credit Ratings and AM Best press releases correctly.
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AM Best provides in-depth analysis and ratings of insurance companies to assess their financial strength and creditworthiness. Selective Insurance Group recently earned upgraded ratings from AM Best, affirming its strong financial position. This article will examine Selective’s AM Best ratings and what they mean for policyholders.
Overview of AM Best Ratings
AM Best issues two main types of ratings for insurers:
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Financial Strength Rating (FSR) – Assesses an insurer’s ability to pay claims and remain solvent. Ranges from A++ (Superior) to D (Poor).
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Long-Term Issuer Credit Rating (Long-Term ICR) – Evaluates overall creditworthiness and ability to meet ongoing obligations. Ranges from aaa (Exceptional) to c (Poor).
These independent analyses inform consumers, agents, and brokers about an insurer’s financial stability. Higher ratings indicate less risk of insolvency. AM Best adjusts ratings frequently as conditions change.
Selective Insurance’s AM Best Ratings
Selective Insurance Group holds the following AM Best ratings as of November 2022:
- Financial Strength: A+ (Superior)
- Long-Term Issuer Credit: aa- (Superior)
Both were recently upgraded from A (Excellent) and a+ (Excellent) in November 2021, indicating improvement in Selective’s financial metrics and risk profile.
Selective first received A- ratings from AM Best in 1930. The company has maintained ratings in the “Excellent” to “Superior” range for decades, affirming its consistent financial strength.
What Selective’s Ratings Mean
According to AM Best’s analysis, Selective Insurance possesses
- Very strong balance sheet, operating performance, business profile, and enterprise risk management
- Low underwriting and credit risk relative to the property/casualty industry
- Strong risk-adjusted capitalization
The upgrades reflect Selective’s excellent capitalization, strong operating profits, disciplined underwriting, and established market presence.
These ratings give stakeholders confidence that Selective can fulfill obligations even under stressed scenarios. Policyholders can rely on the insurer to pay claims promptly.
Key Rating Factors for Selective
Some positives AM Best highlighted in its analysis
- Strong risk-adjusted capital well above the threshold for required surplus
- Consistent operating profits and 11-year streak of underwriting income
- Highly profitable core commercial and personal auto focus
- Significant market share and strong brand recognition
- Extensive risk management framework and controls
AM Best also noted Selective’s conservative reserving practices and reinsurance protections as positives. Its affiliation with strong distribution partners like independent agents also adds credibility.
The Significance of High AM Best Ratings
Selective’s A+ (Superior) FSR and aa- (Superior) Long-Term ICR designations from AM Best reflect its:
- Strong capital adequacy and liquidity
- Solid underwriting discipline and operating results
- Established market position over 90+ years
- Effective enterprise risk management practices
These high ratings give agents, brokers, and policyholders confidence that Selective maintains the financial strength and operational execution needed to perform well even in difficult conditions. Overall, Selective’s AM Best ratings affirm it as a stable and reliable insurer.
Frequently Asked Questions
What is the highest rating from AM Best?
The highest AM Best ratings are A++ (Superior) for Financial Strength and aaa (Exceptional) for Long-Term Issuer Credit. Selective’s A+ and aa- ratings show strength, though slightly below the top.
What does Selective’s “Stable” outlook mean?
The “Stable” outlook indicates AM Best expects Selective’s strong credit attributes to persist over the medium term with low risk of downward rating pressure.
Has Selective’s rating been upgraded before?
Yes, Selective was upgraded from A to A+ in 2021. Its ratings steadily improved from a B+ rating in the 1980s and early 1990s.
Is Selective Insurance Group financially strong?
Yes, Selective’s balance sheet, operating performance, capitalization and other metrics are very strong relative to peers according to AM Best. The ratings reflect overall financial stability.
Do AM Best ratings impact insurance premiums?
Insurers with higher ratings may be able to negotiate lower reinsurance rates, reducing expenses. But retail premiums are based on many factors, so AM Best ratings have minimal direct impact on policyholder costs.