STATE NATIONAL COMPANIES INC BEDFORD, Texas, June 9, 2015 (GLOBE NEWSWIRE) -- State National Companies, Inc. (Nasdaq:SNC) today announced that A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings of "a" of State National Insurance Company, Inc. (SNIC) and its subsidiaries National Specialty Insurance Company (NSIC) and United Specialty Insurance Company (USIC) (all headquartered in Bedford, TX), which operate under a pooling agreement and are collectively referred to as State National Group (State National). The outlook for all ratings is stable.
A.M. Best stated the following in a press release dated June 9, 2015:
Concurrently, A.M. Best has assigned an issuer credit rating of ICR "bbb" to State National Companies, Inc. (State National Companies) (Bedford, TX) [NASDAQ: SNC]. The outlook assigned to the rating is stable.
The ratings of the insurance operating companies reflect their excellent risk-adjusted capital position, sustained operating profitability driven by its core collateral protection insurance business and favorable liquidity. Additional supporting factors include its strong profile serving as a provider of policy issuance and management services on program business administration for other specialty insurance organizations. This business produces significant fee income for the organization. Part of State National's success in program business is its ability to avoid channel conflicts and mitigate exposure through collateral posted by participating companies.
These positive rating factors are partially tempered by the elevated ceded leverage from the extensive use of reinsurance. This is somewhat mitigated by the collateral held by State National. The risk is also controlled by indemnification agreements contained within the reinsurance contracts. In recent years, the program business has grown significantly, and this portfolio has a dependency on third-party capital.
The rating assigned to State National Companies is based on its role as the ultimate parent holding company for the State National insurance operating companies. As of Dec. 31, 2014, debt-to-capital and debt-to-tangible capital ratios (excluding other comprehensive income/loss) were 15.8% and 16.2%, respectively. Furthermore, interest coverage and cash flow for the parent is exceptionally strong.
A.M. Best believes the ratings are well-positioned at their current level. Positive rating action in the long term is possible with improvements in operating results and metrics. Factors that may lead to a negative rating action include a significant decline in risk-adjusted capital position, operating performance that falls short of expectations, modifications to the business profile that may lead to adverse overall results or a large dispute over reinsurance recoverable amounts.
About State National Companies, Inc.
State National Companies, Inc. (Nasdaq:SNC) is a leading specialty provider of property and casualty insurance operating in two niche markets across the United States. In its Program Services segment, the Company leverages its "A" (Excellent) A.M. Best rating, expansive licenses and reputation to provide access to the U.S. property and casualty insurance market in exchange for a ceding fee. In its Lender Services segment, the company specializes in providing collateral protection insurance, which insures personal automobiles and other vehicles held as collateral for loans made by credit unions, banks and specialty finance companies. To learn more, please visit www.statenational.com.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Various statements contained in this press release, including those that express a belief, expectation or intention, as well as those that are not statements of historical fact, are forward-looking statements made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. Our forward-looking statements are generally, but not always, accompanied by words such as "estimate," "believe," "expect," "anticipate," "would," "will," "may," "plan," "goal," "target," "could," "continue," "intend" or other words that convey the uncertainty of future events or outcomes. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control.
Examples of forward-looking statements include the plans and objectives of management for future operations, including those relating to future growth of our business, and are based on current expectations that involve assumptions that are difficult or impossible to predict accurately and many of which are beyond our control. There can be no assurance that actual developments will be those anticipated by us. Actual results may differ materially from those expressed or implied in these statements as a result of significant risks and uncertainties, including, but not limited to, our ability to recover from our capacity providers, the cost and availability of reinsurance coverage, challenges to our use of issuing carrier or fronting arrangements by regulators or changes in state or federal insurance or other statutes or regulations, our dependence on a limited number of business partners, potential regulatory scrutiny of lender-placed automobile insurance, level of new car sales, availability of credit for vehicle purchases and other factors affecting automobile financing, our ability to compete effectively, a downgrade in the financial strength ratings of our insurance subsidiaries, our ability to accurately underwrite and price our products and to maintain and establish accurate loss reserves, changes in interest rates or other changes in the financial markets, the effects of emerging claim and coverage issues, changes in the demand for our products, the effect of general economic conditions, breaches in data security or other disruptions with our technology, and changes in pricing or other competitive environments.
Forward-looking statements involve inherent risks and uncertainties and State National Companies cautions readers that various factors could cause its actual financial and operational results to differ materially from those indicated by forward-looking statements made from time-to-time in news releases, reports, proxy statements, registration statements, and other written communications, as well as oral statements made from time to time by representatives of State National Companies. These factors and other risks and uncertainties are described in detail in our Annual Report on Form 10-K for the year ended December 31, 2014 and our other filings with the Securities and Exchange Commission. The forward-looking statements in this press release speak only as of the date of this release, and we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.
CONTACT: State National Companies, Inc.
David Hale, COO & CFO
817-265-2000
Dennard * Lascar Associates
Rick Black
713-529-6600
