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Best’s News & Research Service - October 20, 2016 03:35 PM (EDT)

A.M. Best Affirms Credit Ratings of Castle Key Group Members

  • October 20, 2016 03:35 PM (EDT)
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Oldwick //BestWire// - A.M. Best has affirmed the Financial Strength Rating (FSR) of B- (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bb-” of the members of Castle Key Group (Castle Key) (headquartered in St. Petersburg, FL). The outlook of these Credit Ratings (ratings) remains stable. (See below for a detailed listing of the companies.)

The ratings reflect Castle Key’s marginal overall capitalization when measured on a catastrophe stress-tested basis and geographic business concentration resulting in a susceptibility to catastrophic loss accumulation. As a dedicated Florida property writer for its parent company, Allstate Insurance Company (Allstate), Castle Key maintains significant exposure to hurricanes, with a corresponding substantial reliance on catastrophe reinsurance.

These negative rating factors are partially offset by Castle Key’s improved operating performance and surplus accumulation over the last several years, which had been positively impacted by favorable loss activity due to increased rates and the absence of hurricane events through the second quarter of 2016. While operating results in the third quarter of 2016 were adversely impacted by Hurricane Hermine, these related losses have been manageable, without any material impact on Castle Key’s risk-adjusted capital position. Furthermore, given Castle Key’s reinsurance program, its market share in Florida, and the current estimates of industry loss, A.M. Best does not expect that related losses from Hurricane Matthew will have a material impact on the group’s risk-adjusted capital position.

The ratings also benefit from the historical financial and operational support provided to Castle Key as part of the Allstate organization. Castle Key is separately capitalized and not reinsured by Allstate, but it is A.M. Best’s expectation that Allstate would provide sufficient support to maintain risk-adjusted capital that is commensurate with Castle Key’s rating level in the event of frequent and/or severe hurricane activity.

The FSR of B- (Fair) and the Long-Term ICRs of “bb-” have been affirmed for the following members of the Castle Key Group:


  • Castle Key Insurance Company

  • Castle Key Indemnity Company

  • Encompass Floridian Insurance Company

  • Encompass Floridian Indemnity Company

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.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.



Florida Reinsurance Financial Strength Catastrophes Press Release A.M. Best Rating Services, Inc. Hurricanes Insurance Issuer Credit Rating Best's Credit Rating Action Rating Event


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