Rating agency AM Best has placed National Financial on negative review citing a "significant miscalculation" of its risks
AM Best has placed the financial strength ratings of “A-” and issuer credit ratings “a-” of National Financial Group and its sister company, National Life Insurance Company, under review with negative implications.
AM Best cites “a significant miscalculation in the property/casualty company’s total risk exposures”, which does not match up with the firms risk-adjusted capital as the reason behind the negative review.
“The discovery of this miscalculation raises concerns regarding the group’s organisational risk management,” it stated.
The ratings will remain under review until further meetings take place and until AM Best assesses the impact of the increase in total exposures.
The rating agency will also assess the corrective actions implemented by management to try and rectify the problem.
The rating actions on National Life reflect similar concerns regarding enterprise risk management.