Best’s News & Research Service - May 22, 2018 08:22 AM (EDT)
A.M. Best Upgrades Credit Ratings of Spartan Insurance Company
- May 22, 2018 08:22 AM (EDT)
Oldwick //BestWire// - A.M. Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to “a-” from “bbb+” of Spartan Insurance Company (Spartan) (Pearland, TX). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect Spartan’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its very strong operating performance, very limited business profile and appropriate enterprise risk management.
The rating actions reflect a continuation of very strong operating performance, which continues to aid in strengthening of Spartan’s risk-adjusted capitalization. These positive rating factors are driven by Spartan’s niche focus as a direct writer of non-owner private passenger auto liability business, which has resulted in consistent underwriting and operating profits since conception of the product offering. Spartan outperforms the composite significantly as reflected by five-year average pre-tax and total returns on revenue and equity that are well-above composite averages. The company’s favorable returns and minimal liabilities have led to improved underwriting leverage ratios and risk-adjusted capitalization measures.
These positive rating factors are offset partially by Spartan’s narrow product focus, elevated expense position and geographic concentration of risk as a primarily single-state writer. In recent years, Spartan has expanded its product offering in Louisiana. Spartan continues to explore near-term opportunities to offer non-owner private passenger auto liability in other states. However, as Spartan continues to enter into other states, its results are exposed to judicial, economic and regulatory changes. Any material changes in these areas could potentially have a negative impact on the company’s overall profitability.
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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