AM Best


A.M. Best Downgrades Credit Ratings of Security America Risk Retention Group, Inc.


CONTACTS:

Kimberly Muccia
Financial Analyst
+1 908 439 2200, ext. 5731
kimberly.muccia@ambest.com

Richard Attanasio
Senior Director
+1 908 439 2200, ext. 5432
richard.attanasio@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - DECEMBER 16, 2016 12:15 PM (EST)
A.M. Best has downgraded the Financial Strength Rating to B+ (Good) from B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb-” from “bbb” of Security America Risk Retention Group, Inc. (SARRG) (Burlington, VT). The outlook of these Credit Ratings (ratings) has been revised to negative from stable.

The rating downgrades and revised outlook reflect a sizeable surplus decrease of approximately 27% as of third-quarter 2016, as well as adverse reserve development mainly driven by a sizeable claim involving extra contractual obligation coverage, that in the opinion of SARRG, was not provided for and therefore was not reimbursable by the risk retention group’s reinsurance program. This net underwriting loss reflects the increased loss and loss adjustment expense related to the claim, which contributes to an unfavorable combined ratio of more than 200% for the first nine months of 2016. The rating actions and negative outlooks also consider the corresponding material decline in risk-adjusted capitalization associated with the surplus loss and uncertainty regarding future results based on the company’s current exposures. In response to unfavorable underwriting performance, the group’s management continues to focus on improving performance through its newly appointed marketing, underwriting and policy servicing partners, as well as implementing improvements in its policy language to avoid future instances involving unintended coverage. SARRG was formed by the Electronic Security Association and incorporated as a risk retention group created specifically to offer general and professional liability coverage custom designed for its members.

A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

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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AMB# Company Name
076142 Security America Reassurance Group, Inc.