AM Best announced it has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Southern Vanguard Insurance Company, based in Houston, Texas.
The Credit Ratings (ratings) reflect Southern Vanguard’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
AM Best said the negative outlooks reflect pressure on Southern Vanguard’s operating performance given the underwriting volatility in recent years, particularly in 2023 and 2024, which were primarily driven by increased loss frequency and severity of weather-related loss events.
Southern Vanguard also has a geographic concentration of risk, which leaves its susceptible to adverse weather conditions and has greatly contributed to the volatility in underwriting results in recent years.
While AM Best notes that Southern Vanguard has undertaken initiatives to improve and stabilize its underwriting and operating performance, the ultimate effectiveness of these efforts remains uncertain. A prolonged continuation of unfavorable trends may result in further negative rating actions, the credit ratings agency said.
Southern Vanguard’s balance sheet strength assessment is very strong and is supported by its strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which remained at the strongest level.
Positive factors include its conservative investment portfolio, adequate liquidity, comprehensive reinsurance with strong partners, somewhat offset by elevated underwriting leverage, adverse development experienced in recent years and somewhat limited scale of operations, AM Best said.
The limited business profile reflects Southern Vanguard’s property predominate book of business and geographic concentration in Texas, which exposes its operations to severe weather-related events as observed in recent years.
AM Best assess Southern Vanguard’s ERM as appropriate for its size and scale of operations with risk identification and controls in place. As noted on June 3, 2025, Southern Vanguard entered into a sale agreement with Wintaai America Inc. (see related press release.) While part of the sale includes an additional capital contribution to Southern Vanguard post-close, the transaction is not expected to have a material impact on the ratings.
Source: AM Best
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