AM Best Revises Outlooks to Stable for Old Glory Insurance Company

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has revised the outlooks to stable from negative and
affirmed the Financial Strength of B++ (Good) and the Long-Term Issuer
Credit Rating of “bbb” of Old Glory Insurance Company (Old Glory)
(Tyler, TX).

The ratings reflect Old Glory’s balance sheet strength, which AM Best
categorizes as strong, as well as its marginal operating performance,
limited business profile and appropriate enterprise risk management.

The revised outlooks reflect Old Glory’s improving risk-adjusted
capitalization, albeit mostly driven by capital contributions from its
parent company, Heartland Security Insurance Group (Heartland), and
improved loss and loss adjustment expense ratio over the past five
years, which compares favorably with the average for the workers’
compensation (WC) composite. Offsetting some of these positive factors
are the company’s limited size and scale of operations, operating as a
mono-line WC writer with policyholder surplus of $9.8 million as of
Sept. 30, 2018, and greater than 90% of its business generated in
Oklahoma and Texas. This geographic concentration exposes the company to
above average levels of regulatory, economic and event risk. The company
also is challenged by its high expense ratio, which is double the
average of the WC composite. The expense ratio is driven by significant
levels of fixed costs. Despite these challenges, the company has
reported net income in four of the past five calendar years and for the
first nine months of 2018. AM Best expects that Heartland will continue
to support Old Glory’s operations with capital contributions as needed,
allowing the company to maintain risk-adjusted capitalization levels
that continue to support the current rating level.

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
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best’s Credit Ratings
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Jonathan Harris, CFA, FRM, CPCU
Senior Financial Analyst
908 439 2200, ext. 5771

Jacqalene Lentz, CPA
+1 908 439
2200, ext. 5762

Christopher Sharkey
Manager, Public Relations
908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644

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