OLDWICK: AM Best has upgraded the Financial Strength Rating to C++ (Marginal) from C+ (Marginal) and the Long-Term Issuer Credit Rating to “b+” from “b-” of Country-Wide Insurance Company (Country-Wide) (New York, NY). The outlook of the Credit Ratings (ratings) is stable.

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

The rating upgrades are the result of favorable trends in Country-Wide’s balance sheet strength. This is due to continued improvements in policyholder surplus levels, and risk-adjusted capitalization. Country-Wide’s overall risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), has increased to the strong level from the weak level.

Country-Wide’s focus on better, more profitable business, several claims and underwriting initiatives, as well as aggressive rate actions has resulted in lower premiums, which when coupled with increasing capital, has led to the improved level of risk-adjusted capitalization. However, these positive factors are offset partially by historically unfavorable loss reserve developments despite improvements in recent years and high underwriting leverage.

Although reinsurance dependence is high, the company has reduced its quota share treaty continually. Additionally, Country-Wide has limited scale of operations. The company’s business profile is limited due to the product offerings as a single-state auto insurer and geographic concentration in New York.