Employers Holdings & Units Get Ratings Affirmed By A.M. Best

Employers Holdings, Inc. (NYSE:EIG) witnessed affirmation of Long-Term Issuer Credit Ratings (Long-Term ICR) of “bbb-” by the credit rating giant A.M. Best while the outlook of the ratings was revised to positive from stable.

At the same time, the rating agency reiterated the Financial Strength Rating of A- (Excellent) and the Long-Term ICR of “a-” of the parent company’s units, which include Employers Insurance Company of Nevada, Employers Compensation Insurance Company, Employers Assurance Company and Employers Preferred Insurance Company, together known as the Employers Insurance Group. The outlooks of these subsidiaries were revised to positive from stable.

Factors Driving Employers Insurance Group’s Ratings

The rating affirmation came on the back of sustained operational performance, adequate enterprise risk management, limited business profile and solid balance sheet, which is considered strongest by the rating agency. Besides, the ratings highlight the financial flexibility confirmed by the parent company.

Moreover, the units’ robust risk-adjusted capitalization, substantial industry expertise as well as improvement in operating earnings have lent support to the ratings.

The revised outlooks of these units represent higher levels of risk-adjusted capitalization and consistent improvement in underwriting and operating results. However, a limited business profile can partially offset such positives.

Factors Impacting Rating Action

Improvement in the units’ underwriting, operational performance and maintenance of performance level in line with the higher rated peers might drive positive rating action.

However, a noticeable decline in the Employers Insurance Group’s risk-adjusted capitalization or deterioration in the company’s operating performance or reserving position might induce a negative rating action.

It is important to mention that rating affirmations or upgrades from credit rating agencies play an important role in retaining investors’ confidence in the stock as well as maintaining its credit worthiness in the market. Hence such ratings are expected to help Employers Holdings write more business, going forward.

Zacks Rank and Share Price Movement

Employers Holdings sports a Zacks Rank #1 (Strong Buy). Shares of Employers Holdings have underperformed the industry in a year’s time. The stock has gained 5.4% in comparison to the industry’s 17.9% rally. However, we expect sustained operational performance, solid underwriting results and a robust capital position to turn the stock around in the near term.

Other Stocks to Consider

Investors interested in other stocks worth considering from the insurance industry may also look at Radian Group Inc. (NYSE:RDN) , Alleghany Corporation (NYSE:Y) and American Financial Group, Inc. (NYSE:AFG) , each sporting the same bullish Zacks Rank of 1 as Employers Holdings. You can see the complete list of today’s Zacks #1 Rank stocks here.

Radian Group offers mortgage and real estate products and services in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 7.87%.

Alleghany Corporation provides property and casualty reinsurance and insurance products in the United States and internationally. The company came up with positive surprises in two of the last four quarters with an average beat of 2.91%.

American Financial provides property and casualty insurance products in the United States. The company pulled off positive surprises in all the last four quarters with an average beat of 26.31%.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>