Standard & Poor’s Ratings Service lowered its counterparty credit and financial strength ratings on Atlantic Mutual Insurance Co., Centennial Insurance Co., Atlantic Specialty Insurance Co., and Atlantic Lloyds Insurance Co. of Texas (collectively referred to as Atlantic Mutual) to “BBB” from “BBB+” because of Atlantic Mutual’s weak underwriting performance, as demonstrated by its adverse reserve development over the past two years, reduced investment income, increased reliance on financial reinsurance to maintain surplus, the potential for further reserve strengthening, and limited financial flexibility.
Partly offsetting these concerns are signs of improvement in the profitability of business written in the past couple of years, a high-quality investment portfolio, and strong capitalization. S&P also said that it lowered its surplus note rating on AMIC to “BB+” from “BBB-.” The outlook on all these companies is negative.
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