A.M. Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Ratings to “a” from “a-” for both members of the PURE Group of Insurance Companies (PURE). The members, both domiciled in Fort Lauderdale, Fla., are Privilege Underwriters Reciprocal Exchange and PURE Insurance Co.
At the same time, the ratings agency revised the outlook of these ratings to stable from positive. The stable outlooks reflect A.M. Best’s expectation that the group’s rating fundamentals will remain unchanged over the short to medium term.
PURE Group serves the personal insurance needs of high net worth families.
The ratings reflect PURE’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its ‘adequate operating performance, neutral business profile and appropriate enterprise risk management.”
According to A.M. Best, PURE’s balance sheet reflects the group’s improved risk-adjusted capitalization, predominantly as a result of strong growth in policyholder surplus, along with enhancements to the catastrophe reinsurance. Surplus growth in 2018 was significantly impacted by an accounting change approved by the Florida regulator, which allowed for deferred acquisition costs to be reduced by a portion of unearned attorney-in-fact fees, due to their related party status.
Additional financial flexibility is provided through PURE’s parent company and outside sources, as well as from subscriber surplus contributions that are anticipated to continue as new business is generated and retained over several years. Partially offsetting these positive factors are the group’s increased reinsurance cessions and significant growth in direct written premiums.
PURE has also reported improved operating performance in recent years largely due to net loss ratios that compare favorably with industry averages. While there has been some weather-driven volatility in results, the core book of business has performed well, primarily due to underwriting discipline and rate actions, A.M. Best said.
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