Outlooks Revised to Stable for Illinois’ Specialty Risk of America

May 16, 2019

AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Specialty Risk of America (SPRISKA) in Springfield, Illinois.

SPRISKA is a holding company with insurance subsidiaries: Special Insurance Services Inc., which does business under the assumed business name of SPRISKA Brokerage; and Specialty Risk of America. SPRISKA Brokerage operates as a wholesale insurance brokerage for unaffiliated third party insurers, and managing general underwriter for Specialty Risk of America. Specialty Risk of America is a stock property and casualty insurance company.

The ratings reflect SPRISKA’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).

The revised outlooks to stable reflect the improvement in SPRISKA’s operating performance in 2018 and developing ERM capabilities. SPRISKA’s balance sheet strength is supported by the very strong level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR).

SPRISKA’s operating performance on a five-year average basis is marginal, with key operating metrics that lag its peer averages along with the company’s combined ratio. However, net income has been positive over the past few years, and the company achieved underwriting profitability in 2018 largely driven by improvement in the expense ratio.

SPRISKA’s business profile is limited due to the company’s geographical concentration and limited data analytics capability. In addition, the marginal ERM assessment reflects the emerging nature of the ERM program, which the company formalized in 2018.

Negative rating action is possible if there is deterioration in the operating results or capitalization levels fall below AM Best’s expectation for the current rating level.

Source: AM Best

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