OLDWICK, NJ, May 03, 2022–(BUSINESS WIRE)–AM Best assigned a financial strength rating of A- (Excellent) and a long-term credit rating of “a-” (Excellent) to Omaha National Insurance Company (ONIC) (Omaha, NE). The outlook attributed to these Credit Ratings (ratings) is stable.
The ratings reflect ONIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operational performance, limited business profile and appropriate management of business risks.
Very strong balance sheet valuation reflects ONIC’s highest level of risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR), which includes a capital injection of $20 million of the company’s intermediate parent, Omaha National Group, Inc. (ONG), in April 2022, following NGO’s issuance of $20 million of senior unsecured debt. ONG also made a capital contribution of $35 million to the company in December 2021, following the issuance of ONG Series B Convertible Preferred Shares in August 2021. Although ONG is capitalized primarily with convertible preferred stock and debt, resulting in high financial leverage in accordance with AM Best guidelines, balance sheet valuation recognizes characteristics similar to NGO convertible preferred stock, adequate liquidity position of the parent company and continued capital support from several investors.
AM Best assesses the company’s operating performance as adequate based on ONIC’s historical results since its inception in October 2017 and its well-defined business plan, although there is some execution risk associated with the the company’s plan to begin underwriting business produced by its affiliated general agent, Omaha National Underwriters, LLC (UN), on a direct basis. ONIC pays nearly all of its premiums through a copayment agreement with an unaffiliated insurer, Preferred Professional Insurance Company (PPIC). The company is produced by ONU, which manages all aspects of the policies sold by PPIC. AM Best views the company’s business profile as limited, as ONIC is a single-line workers’ compensation insurer with a geographic focus in California. ONIC’s ERM capabilities benefit from rigorous claims monitoring, established risk tolerance levels and strict underwriting guidelines.
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Robert Valenta, CPCU
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