Ratings Roundup: AMEX Assurance, SeaBright

A.M. Best Co. has upgraded the issuer credit rating to “a+” from “a” and affirmed the financial strength rating of ‘A’ (Excellent) of AMEX Assurance Company, a wholly owned subsidiary of American Express Company. The outlook for both ratings is stable. The rating upgrade reflects AMEX Assurance’s “strong capital position and continued trend of favorable earnings generated by providing insurance products to American Express card members,” Best explained. AMEX Assurance’s strong capital position is “reflective of its conservative investment risk profile and favorable operating results driven by solid profit margins. The favorable operating results reflect the company’s low-cost, direct marketing strategy and its emphasis on travel related and other ancillary insurance coverages offered to American Express card members.” As partial offsetting factors Best cited AMEX Assurance’s “limited business scope, as the majority of its products are primarily confined to American Express card members and lack of growth in surplus levels as all of the company’s prior year’s net income has been returned to American Express through stockholder dividends.”

A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating (ICR) of “a-” of Chicago-based SeaBright Insurance Company, and has also revised the outlook to negative from stable and affirmed the ICR of “bbb-” of the publicly traded holding company of SeaBright, Delaware-based SeaBright Holdings, Inc. Best said the rating actions reflect the “significant downturn in SeaBright’s operating results in 2010 and 2011, which were driven by weakened underwriting performance associated with reserve strengthening actions for accident years 2007 through 2009, primarily related to increasing medical cost trends.” In addition Best noted that SeaBright “continues to face marketplace challenges associated with its geographic and coverage lines expansion, which are likely to limit any turnaround in the company’s operating performance over the near term. Despite the revised outlook, the affirmation of the ratings recognize SeaBright’s solid risk-adjusted capitalization, historically profitable operating results and the experienced management team within its niche workers’ compensation market.”