AM Best Downgrades Outlook for Journey Insurance

October 27, 2021

AM Best credit rating agency has given Florida-based Journey Insurance Co. a financial strength rating of “excellent,” but downgraded the company’s outlook from stable to negative, due to its parent company’s capitalization.

Journey, headquartered in St. Petersburg, Florida, is majority owned by United Insurance Holdings Inc. It was created just three years ago to take advantage of opportunities in the commercial residential market, including apartments and condominiums, in Florida, South Carolina and Texas, A.M. Best said.

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United Insurance Holdings “has reported material equity erosion in 2020 and year-to-date 2021, primarily driven by catastrophe losses,” Best said in a news release. “The negative outlooks reflect the observed deterioration in the consolidated financial position of UIHC and its risk-adjusted capitalization, as measured by Best’s Credit Adequacy Ratio (BCAR), which pressures Journey’s overall balance sheet strength assessment.”

Company management has outlined plans to stabilize performance and curb further erosion of capital.

Journey’s balance sheet strength assessment reflects the infusion of capital to support growth in underwriting, credit and investment risks, AM Best said. The rating firm “will monitor the execution of near-term plans as communicated by management and their impact on alleviating pressure on Journey’s balance sheet strength.”

The report is the second downgrade of a Florida insurer in the last week. AM Best also has downgraded the outlook for Florida Farm Bureau Casualty Co. from stable to negative. Both grades reflect Florida’s troubled property insurance market, in which the majority of the largest carriers have reported net losses this year and declining surplus levels.

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