AM Best has upgraded the Financial Strength Rating (FSR) to B++ (Good) from B+ (Good) and Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” from “bbb-” of Bankers Insurance Co., headquartered in St. Petersburg, Fla., and its property/casualty subsidiaries, Bankers Specialty Insurance Co. (Metairie, La.) and First Community Insurance Co. (St. Petersburg, Fla.).
The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
AM Best said the ratings reflect the balance sheet strength of Bankers and its subsidiaries, which Best categorizes as very strong, as well as their marginal operating performance, limited business profile and appropriate enterprise risk management.
The upgrade reflects sustained improvement in risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is categorized as very strong, according to Best.
“While maintaining a comprehensive catastrophe reinsurance program, Bankers and its subsidiaries have strategically refined their personal lines exposure to reduce the potential severity of severe weather events, which has driven the improved BCAR position,” Best said.
Furthermore, Best noted, following a comprehensive loss reserve review, the group addressed recent shortfalls in runoff lines of business through material reserve strengthening in 2017. Initial indications reflect overall favorable loss reserve development in 2018 with the expectation for this trend to continue in the near-term as a result of the corrective actions. The company’s balance sheet strength assessment also includes consideration for the conservative investment portfolio, which is predominantly comprised of high quality fixed-income securities and avoids significant exposure to volatility in the equity market.
Best said Bankers and its subsidiaries have implemented several profitability initiatives in an effort to improve future results. These actions include the identification and runoff of undesirable business lines, non-renewal of unfavorable homeowners business, the reduction of risk accumulations in hurricane-prone areas, refinement in underwriting platforms and guidelines, and the termination of a quota share agreement in order to retain more profitable business. AM Best expects these actions to improve future operating performance, which in turn will support the capital position in future periods.
Source: AM Best
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