AM Best affirms credit ratings of PhenixFIN Corp’s insurance subsidiaries

Investing.com -- AM Best, the credit rating agency, has taken off the ’under review with negative implications’ status and has affirmed the credit ratings of two insurance subsidiaries under PhenixFIN Corporation. The two companies are National Security Fire and Casualty Company (NSFC) and Omega One Insurance Company, Inc. (Omega). Both companies are based in Elba, AL.

The Financial Strength Rating (FSR) of B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) of "bb" (Fair) of NSFC have been affirmed by AM Best. The agency has also affirmed the FSR of B- (Fair) and the Long-Term ICR of "bb-" (Fair) of Omega. The outlook for these credit ratings is stable.

The ratings of NSFC reflect its adequate balance sheet strength, marginal operating performance, limited business profile, and appropriate enterprise risk management (ERM). The ratings of Omega reflect its strong balance sheet strength, marginal operating performance, very limited business profile, and appropriate ERM. The stable outlook assigned to these property/casualty entities reflects additional risk reduction efforts by NSFC to reduce exposure to catastrophe events by further reducing its coastal footprint, as well as additional capital at the holding company following the acquisition by PhenixFin and investment by Tower I, LP.

However, AM Best has maintained the under review with negative implications status for the FSR of B (Fair) and the Long-Term ICR of "bb" (Fair) of National Security Insurance Company (NSIC), another subsidiary of PhenixFIN Corporation.

The ratings of NSIC reflect its weak balance sheet strength, adequate operating performance, limited business profile, and appropriate ERM. The under review with negative implications status reflects the continued pressure on the company’s balance sheet due to the change in loss reserve methodology and statutory strain from the annuity business despite a capital injection from the recently closed acquisition by PhenixFin. The under review status also reflects the need to execute successfully on additional recapitalization plans, and improving operating performance over time on the existing book of business.

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