View this article online: https://www.insurancejournal.com/news/southcentral/2014/02/26/321581.htm
A.M. Best has downgraded the financial strength rating (FSR) to B++ (Good) from A- (Excellent) and issuer credit rating (ICR) to “bbb+” from “a-” of Delta Lloyds Insurance Company of Houston Texas (Delta Lloyds) (Houston, Texas). The outlook for the FSR has been revised to stable from negative, while the outlook for the ICR is negative.
The rating downgrades primarily reflect Delta Lloyds’ volatile operating performance due to a continuing unfavorable underwriting performance.
This was particularly evidenced in 2011 and 2013 by a series of frequent and severe weather-rated events that resulted in sizable underwriting losses as well as a decline in overall risk-adjusted capitalization.
As a single state property writer, Delta Lloyds’ surplus and operating results are exposed to frequent and severe weather-related events. However, a prudent reinsurance program is maintained to partially mitigate this risk.
In addition, management has on-going initiatives to improve overall performance, which include but are not limited to stricter underwriting guidelines and reduction in unprofitable business along with significant rate increases.
These negative rating factors are partially offset by Delta Lloyds’ adequate risk-adjusted capitalization, moderate underwriting leverages, generally positive realized capital gains and favorable balance sheet liquidity. In addition, despite an unfavorable underwriting performance, Delta Lloyds continues to report loss reserve redundancies on both an accident and calendar year basis.
Source: A.M. Best