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FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 12, 2014 02:52 PM (EST)
A.M. Best has downgraded the financial strength rating to C++ (Marginal) from B (Fair) and the issuer credit rating to "b" from "bb" of Peachtree Casualty Insurance Company (Peachtree) (Longwood, FL) and placed these ratings under review with negative implications.
The rating downgrades are the result of the reduction in Peachtree's risk-adjusted capitalization following recent volatility in its underwriting performance. Significant underwriting losses in 2014 have contributed to a sharp decline in Peachtree's policyholder surplus, which resulted in elevated underwriting leverage measures and risk-adjusted capitalization that is no longer supportive of its previous rating level.
This recent deterioration was driven by rapid new premium growth in Texas, adverse loss experience in Florida, Texas and Georgia, as well as increased claims overhead and underwriting expenses.
The under review status reflects Peachtree's 2014 results, which are significantly worse than projected. The ratings will remain under review pending the conclusion of discussions between A.M. Best and Peachtree's new management regarding actions being considered to strengthen the company's financial condition in the near term.
The negative implications reflect A.M. Best's concern regarding the potential for additional deterioration in Peachtree's financial condition should management fail to execute on these actions. If the capital weakness exhibited in Peachtree's 3rd Quarter 2014 filings is not remedied in the near term, there would likely be further downward pressure on its ratings.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
This press release relates to rating(s) 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 visit A.M. Best's Ratings & Criteria Center .
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.