AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Pekin Select Insurance Co. (PSIC), headquartered in Pekin, Ill., a subsidiary of Pekin Insurance Group (Pekin).
The outlook is stable.
PSIC, which writes preferred workers’ compensation business, is a newly formed member of the Pekin Insurance Group, AM Best said. Pekin’s other subsidiaries include: Farmers Automobile Insurance Association (FAIA), a reciprocal exchange that was formed in 1921; Pekin Insurance Co. (PIC), a stock company founded in 1961 whose shares are wholly owned by FAIA; and Pekin Life Insurance Co. (PLIC).
Both FAIA and PIC offer a full array of personal and commercial property/casualty insurance products. Based in Illinois, the companies operate in more than 20 states.
PSIC’s ratings reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also reflect the addition of PSIC to the group’s intercompany reinsurance pooling agreement, and PSIC’s strategic importance to Pekin.
Additionally, the ratings reflect the execution risk associated with any new business that PSIC will underwrite.
The very strong balance sheet assessment reflects Pekin’s consolidated risk-adjusted capitalization, which is projected to remain at the strongest level over the near term, as measured by Best’s Capital Adequacy Ratio (BCAR).
The marginal operating performance reflects Pekin’s below average underwriting performance primarily driven by increased catastrophe losses in recent years and a comparatively high expense structure.
With that, management has instituted several profitability initiatives, including expanded use of predictive modeling, pricing changes and significant technology upgrades.
Source: AM Best
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