Six weeks after Trusted Resource Underwriters Exchange, a Florida-based reciprocal property insurer, announced it had received a $1.25 billion capital investment and new majority ownership, the AM Best rating firm has slightly downgraded the exchange’s financial strength and credit ratings.
AM Best said in a bulletin this week that the revisions reflect TRUE’s balance sheet, changes in ownership, as well as a lack of information from the new owners about the exchange’s business plan. At the same time, TRUE has decided to no longer participate in AM Best’s rating process.
Demotech, another rating firm, one that has been criticized by Florida insurers and regulators, meanwhile, granted Trusted Resource an “A Exceptional” rating earlier this week.
The news came on the heels of a Jan. 5 bulletin from the Florida Office of Insurance Regulation touting the move by Gallatin Point Capital to buy a majority stake in TRUE from Wisconsin-based American Family Insurance, as a sign of an improving Florida market. Gallatin Point plans to take TRUE nationwide, the investment firm’s managing partner, Matthew Botein, said in January.
AM Best said the purchase by Gallatin Point, however, means TRUE no longer has the benefit of American Family rate increases. American Family Connect Property & Casualty Insurance last June requested a 10.4% overall increase in HO-3 rates in Florida and a 24% hike in HO-6 rates. The Florida OIR has yet to decide on that.
On Jan. 10, TRUE submitted its own rate filing: changes to its underwriting rules for homeowners insurance, which OIR approved. And the exchange last June dropped its rate stabilization plan, which had limited rate increases and decreases to no more than 25%. Large rate swings were seen after TRUE introduced a new hurricane peril model in 2021, the filing noted.
TRUE and American Family officials could not immediately be reached for comment Friday morning.
Related: Gallatin Point Buys Majority Stake in American Family’s Florida Unit, Has National Plans
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