The ratings of BITCO Insurance Companies reflect the group's strong risk-adjusted capitalization, conservative balance sheet, evidenced by consistently favorable prior accident year development, and solid overall liquidity. The ratings also reflect the group's historical operating performance, which benefits from its loss control and risk management expertise as a specialty underwriter of risk transfer programs for the construction, oil and gas extraction and forest products industries. These positive rating factors are partially offset by the ongoing challenging workers' compensation and commercial automobile liability markets, given increasing competition and higher loss trends, as well as the company's concentration in industries exposed to U.S. economic cycles. To a lesser degree, BITCO also maintains above-average common stock leverage.The ratings of Great West reflect its excellent risk-adjusted capitalization, conservative balance sheet, trend of strong underwriting and operating profitability, and its specialty niche underwriting expertise as a leading commercial automobile insurer. These positive rating factors are partially offset by its business concentration in commercial trucking, which has experienced increases in severe losses. The company maintains above-average common stock investment portfolio leverage position. ORGENCO's ratings reflect its supportive risk-adjusted capital position and historically strong operating performance which benefit from the ceding commissions received from affiliates. These positive rating factors are partially offset by the company's concentrated source of business and its above-average common stock leverage position. The ratings of PMA reflect its expertise in providing workers' compensation insurance, and, to a lesser degree, other commercial coverages to mid- to large-size businesses in select industries and the financial and operational support being provided by its affiliates. These positive rating factors are somewhat offset by PMA Group's product concentration in workers' compensation coverages and continued adverse prior-year loss reserve development. The ratings of ORTIG recognize its strong liquidity and reserving practices, which remain among the most conservative in the title industry. While the group has substantially increased its premium volume in recent years, operating results have trended favorably since 2010 as a result of its improved underwriting performance, and enhanced the group's presence, allowing it to become more competitive. Somewhat offsetting these positive rating factors are the challenges ORTIG faces in order to maintain its positive trend of improved operating performance and risk-adjusted capitalization. Another offsetting rating factor is the group's higher underwriting leverage measures due to the rapid increase in premium volume over the past five years.
The ratings of Old Republic Canada are based on its strong risk-adjusted capitalization and solid operating performance, as well as the support from the synergies it realizes as an affiliate of Great West. Partially offsetting these positive rating factors are the company's narrow product offering, the current soft market conditions and challenging judicial environment in Canada, which have translated into the company's recent below average operating performance.The ratings of Old Republic Union reflect the explicit support being provided by Old Republic General Insurance Group and the company's strategic role within the organization. The ratings also acknowledge the company's excellent risk-adjusted capitalization. These positive rating factors are somewhat offset by Old Republic Union's limited business profile. The ratings of ORSC reflect its excellent operating performance, solid risk-adjusted capitalization, strict underwriting controls and conservative loss reserving practices. These strengths are offset by ORSC's modest business profile, elevated underwriting expense ratio and increased severe losses recognized in 2016. The ratings of ORL reflect its strong level of risk-adjusted capitalization and low percentage of interest-sensitive liabilities. Partially mitigating factors include its modest business profile, with most life insurance product lines in run-off mode and lower investment income. Earnings trends have been generally lower in recent years, although earnings in the current year increased due to higher premium, and favorable mortality and disability experience. There have been concerns in recent years regarding the uncertainties associated with ORI's run-off of its mortgage insurance and consumer credit indemnity insurance books of business. These concerns have moderated given the recent improvement in ORI's run-off books of business, improved consolidated earnings and solid overall liquidity, as well as A.M. Best's expectation that the run-off books of business will continue to play less of a role in relation to ORI's continuing operations. Additionally, ORI maintains relatively strong interest coverage and modest debt-to-total capital ratios.
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