A.M. Best has upgraded the Long-Term Issuer Credit Rating to “bbb+” from “bbb” and affirmed the Financial Strength Rating of B++ (Good) of Kentucky Growers Insurance Company (KGIC) of Lexington, KY. The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect KGIC’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management, according to a statement from the ratings agency.
A.M. Best said the rating actions reflect KGIC’s considerable improvement in operating performance over the past five years, driven by its consistently positive underwriting results. Growth in policyholders’ surplus has been reported in each of the past five years, attributable primarily to underwriting gains.
The ratings also reflect the KGIC’s “very strong balance sheet,” driven by its risk-adjusted capitalization being at the strongest level, low loss reserve leverage, comprehensive reinsurance program with strong partners and strong liquidity measures enhanced by positive operating and underwriting cash flows.
A.M. Best noted, however, that these positive rating attributes are offset somewhat by KGIC’s limited financial flexibility and scale.
Additionally, KGIC’s business profile is limited by its single-state concentration in Kentucky, which exposes its results to frequent and severe weather-related events, as well as potential judicial, economic, competitive or regulatory challenges.
Source: A.M. Best
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