AM Best Revises Outlook to Stable for California Insurance Company and Affiliates

AM Best has revised the outlooks to stable from negative for California Insurance Company and its affiliates, collectively known as North American Casualty Group (NAC). The Financial Strength Rating (FSR) remains at A- (Excellent), and Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a-” (Excellent) were affirmed. This decision reflects NAC's very strong balance sheet strength, solid operating performance, and limited business profile balanced against marginal enterprise risk management (ERM).

The revised outlook follows governance improvements at NAC, including strengthened financial reporting and a reconstituted board of directors. These actions addressed prior governance challenges such as delayed financial audits. The 2024 financial audits were completed ahead of schedule and involved engagement with a more prominent auditor, which AM Best noted favorably.

NAC continues to manage a protracted legal dispute over a conservatorship order; however, AM Best views the potential adverse financial impact as currently immaterial and will keep monitoring developments. The ratings reaffirm the company’s strong market position despite this ongoing legal matter.

AM Best’s reaffirmation of ratings and outlook revision to stable signals confidence in NAC’s risk profile and operational reforms. This development provides clarity for stakeholders on the company’s financial stability and governance enhancements in the California insurance market.

The update underscores the importance of effective enterprise risk management and governance for insurance companies navigating complex regulatory and operational environments. Market participants should note how timely financial reporting and board oversight contribute to rating stability.

AM Best is a recognized global rating agency specializing in insurance industry assessments, with a history of providing ratings that influence market perceptions and regulatory evaluations. The company maintains stringent criteria to evaluate insurers' financial strength and creditworthiness, affecting capital access and competitive positioning.