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FOR IMMEDIATE RELEASE
NEW YORK - DECEMBER 01, 2016 07:49 AM (EST)
A.M. Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating to “bbb-” from “bbb” of American Safety Risk Retention Group, Inc. (ASRRG) (headquartered in Atlanta, GA). The outlook of these Credit Ratings (ratings) has been revised to stable from negative.
The ratings reflect ASRRG’s weak operating performance, declining surplus levels, limited business profile and management’s difficulty in successfully executing a business plan to build its core book of business as a stand-alone entity. Although loss experience in the company’s specialized niche has been generally favorable, the expense ratio is highly elevated with limited premium growth opportunities. As a result, pre-tax operating losses have been generated, driving a loss of surplus.
Partially offsetting these negative rating factors are favorable risk-adjusted capitalization, despite the recent surplus reductions, management’s historical track record of producing profitable business in the company’s niche specialty market and strong retention renewal rates. Management is committed to ASRRG’s mission of providing insurance solutions to its members and policyholders remaining loyal to the program, which is evidenced by high retention levels. In an effort to improve operating results, cost reduction initiatives have been implemented. Despite these initiatives, as noted, overall expenses remain high and continue to put a strain on operating performance due to the generally limited business profile.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings.
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