AM Best Revises Outlooks to Stable for The Northern Neck Insurance Company

AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of The Northern Neck Insurance Company (Northern Neck) (Irvington, VA).

The Credit Ratings (ratings) reflect Northern Neck’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The revised outlooks to stable from negative reflect Northern Neck’s improved operating performance in recent years, driven by management’s pricing, underwriting and agency management actions. Results in 2024 continued to trend favorably despite several market challenges including weather-related events and fire losses. Net investment income and realized gains have played a key role in the company’s improved operating results, partially constrained by continued underwriting volatility, albeit trending lower. Nonetheless, pretax operating income was reported in 2024 and net income in four of the past five years. Total return metrics remain modestly positive over the five-year period.

Northern Neck’s balance sheet strength assessment is supported by risk-adjusted capitalization maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), high-quality investment portfolio with solid liquidity partially offset by elevated common stock leverage relative to the composite. While loss reserve development was favorable in 2024, this position needs to be sustained given deficiencies reported over a prolonged period in earlier years. The business profile reflects Northern Neck’s single-state property predominant book of business that exposes results to frequent and severe weather-related events and competitive market pressures. The appropriate ERM assessment reflects formalized risk appetite and tolerance statements maintained for key areas, aided by a comprehensive reinsurance program. While tail risk is elevated as reflected by BCAR at the 99.8% VaR confidence level, management continues to refine coastal TIV to mitigate catastrophe exposure.

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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