Additionally, A.M. Best has affirmed the FSR of A+ (Superior) and ICRs of "aa-" of Travelers Casualty and Surety Company of America (Hartford, CT) and its affiliate, Travelers Casualty and Surety Company of Europe Limited (United Kingdom). A.M. Best also has affirmed the FSR of A (Excellent) and upgraded the ICR to "a+" from "a" of The Premier Insurance Company of Massachusetts (Worcester, MA).
In addition, A.M. Best has affirmed the FSRs of A (Excellent) and ICRs of "a" of TNC Insurance Group and Travelers of New Jersey Group and their respective property/casualty members. Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of "a-"of First Floridian Auto and Home Insurance Company (Tampa, FL). The outlook for all the above ratings is stable. Also, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of "a-"of Discover Reinsurance Company (Indianapolis, IN). The outlook for these ratings is negative. (See link below for a detailed list of the companies and ratings.)
The affirmation of Travelers' ratings reflects its strong risk-adjusted capitalization, diligent risk management, superior earnings power, dominant market profile in commercial and personal lines and quality management team. The ratings also acknowledge the group's continuing strategic focus on profitability, emphasizing both underwriting and financial discipline, geographic and product diversification and superior technology, which has improved its underwriting effectiveness and ability to service its agents and customers. In addition, the ratings consider the benefits that have been derived through the integration of the St. Paul's and Travelers' operations. The ratings also recognize Travelers' significant earnings in 2005--despite sizable catastrophe losses and asbestos reserve development--and particularly in 2006, which have significantly increased the group's statutory surplus. Concurrent with modest changes in net premiums written, loss reserves and ceded reinsurance, underwriting leverage measures have substantially improved.
The ratings also recognize the financial flexibility provided by The Travelers Companies, Inc., which has ready access to capital markets. In 2007 and 2008, the holding company intends to continue repurchasing shares of its common stock. Travelers Companies, Inc.'s liquidity is significant, with $1.7 billion of liquid funds at March 31, 2007. A.M. Best believes the holding company will maintain liquid funds in excess of $1.0 billion in 2007. Its debt-to-total capital, which stood at 19.7% at March 31, 2007, is within acceptable levels for the current ratings and should be relatively unaffected for the duration of 2007.
Offsetting these positive factors has been volatility of Travelers' asbestos and environmental (A&E) reserves prior to 2006, although A.M. Best acknowledges that in 2005 and 2006, overall commercial lines reserves excluding A&E appear to have stabilized, while significant redundancies have occurred in personal lines reserves. Furthermore, being among the largest commercial insurers and national property writers, Travelers has significant exposure to potential terrorist-related losses and natural catastrophes, although it has comprehensive and active programs in place to manage its spread of risk and limit its exposure to a single event.
The rating actions for Premier Insurance Company of Massachusetts recognize its strong stand alone capitaliz