AM Best Assigns Credit Ratings to Centerline Property & Casualty of Tennessee

AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” to Centerline Property and Casualty Insurance Co., headquartered in Knoxville, Tenn. The outlook assigned to these Credit Ratings is stable.

The ratings reflect Centerline’s balance sheet strength, which AM Best said it categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

Centerline was founded in 1970 as a licensed commercial insurer, and primarily and successfully covered affiliated insurance risks in-house for its parent, Watkins Associated Industries, Inc. (WAI) until 2014, when it registered as a Tennessee-domiciled pure captive for WAI. It has expanded its scope to that of a fully licensed commercial insurer domiciled in Tennessee as of Jan. 1, 2019.

WAI is an 85-year-old Florida-incorporated, family-owned conglomerate engaged in five major activities: trucking, food processing, building material manufacturing, real estate development and operations, and insurance services throughout the United States. WAI ownership and Centerline’s executive management are interlocked, developing attributes over time of a methodical and risk-averse culture in synergistic, long-term ventures, Best said.

In its risk management role for WAI, Centerline’s underwriting performance has been very good as a small, niche commercial lines insurer providing insurance products concentrated in the commercial transportation sector.

Products written by Centerline include affiliated commercial auto liability/physical damage, general liability and cargo. The company has two primary lines of business: affiliated company business for WAI; and non-affiliated small fleet trucking coverage fronted through State National Insurance Company, Inc. It is currently developing a new third-party cargo product with low insurance risk and a short tail, the largest risk of which is execution with innovative distribution plans. AM Best said it will monitor management’s execution of its business plans for take-up and profitability, especially as it relates to the new third party cargo product.

Best noted positive rating action could occur in the near to medium term if underwriting and operating results continue to outperform the company’s peers and achieve management’s projections, as it transitions from a captive to a fully licensed commercial insurance writer or if it maintains its strongest Best’s Capital Adequacy Ratio (BCAR) scores while materially growing its surplus over time through underwriting and operating earnings.

Negative rating action could occur if the company’s risk-adjusted capitalization, as measured by BCAR, or surplus size declines materially; if the company’s underwriting or operating performance weakens and negatively impacts surplus or risk-based capitalization; or if underwriting and operating results underperform materially or differ from management forecasts.

Source: AM Best

Topics Property AM Best Property Casualty Tennessee Casualty