AM Best Downgrades Financial Rating of Illinois’ Prime Insurance

AM Best has downgraded the Financial Strength Rating to B (Fair) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bb+” (Fair) from “a-” (Excellent) of Prime Insurance Company based in Chicago, Illinois.

Concurrently, AM Best has maintained the under review with negative implications status for these Credit Ratings (ratings).

The ratings of Prime reflect its balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM).

These rating actions reflect AM Best’s continuing concerns related to the adequacy of the company’s loss reserves and its decreasing risk-adjusted capitalization contributing to a lower overall balance sheet assessment.

AM Best also revised the assessment of Prime’s ERM to marginal from appropriate reflecting concerns regarding the effectiveness of Prime’s reserve risk management relative to the size and complexity of this risk.

The marginal assessment also contemplates the effectiveness of the company’s capital management plans and the potential regulatory implications related to lower risk-based capital levels as prescribed by the National Association of Insurance Commissioners. Management’s ability to meet these required levels is another consideration, the ratings agency said.

Prime reported $111 million adverse reserve development in 2024, representing 31% of prior year-end reserves, and an additional $29 million adverse development in 2025, representing 6% of prior year-end reserves.

For the first six months of 2026, the company reported another $78 million of adverse reserve development with the potential for further adverse reserve development in the second half of 2026.

The ratings will remain under review pending the filings of Prime’s statutory financial statements for third-quarter 2026, and AM Best’s meeting with management to better assess the company’s reserves, risk-adjusted capital and any and/or all mitigation tactics available.

Source: AM Best

Topics AM Best Illinois