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FOR IMMEDIATE RELEASE
OLDWICK - JULY 19, 2017 11:46 AM (EDT)
A.M. Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” from “a+” and affirmed the Financial Strength Rating (FSR) of A (Excellent) of Antilles Insurance Company (Antilles) (San Juan, PR). The outlook of these Credit Ratings (ratings) has been revised to negative from stable.
The rating actions reflect a significant decline in Antilles’ policyholders’ surplus, primarily driven by significant stockholder dividends, unrealized capital losses and deterioration in underwriting performance in recent years. The deterioration in underwriting results has been driven by an elevated underwriting expense structure coupled with a significant reduction in the company’s premium volume. The decline in premium volume was due to a reduced assumption percentage on its reinsurance agreement for the Puerto Rico compulsory auto book of business. This assumed book has significantly declined over the past four years, from a high of $34 million in 2013 to $12 million in 2016. This contract ended at year-end 2016.
To counter the loss of the compulsory auto book of business, Antilles has developed a new dwelling product that will be distributed mainly through independent agencies as opposed to the current bank-owned agencies. Presently, the vast majority of the island’s dwelling book of business is run through the banking agencies, which requires an elevated commission rate inclusive of a profit commission. While this new product will refund a percentage of the premiums for good experience directly to the policyholder, A.M. Best has concerns with the company’s ability to reach the economy of scale required to make this a profitable product in this very challenging market.
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. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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