AM Best Removes From Under Review With Negative Implications and Affirms Credit Ratings of Bankers Insurance Group’s Members
The outlook assigned to these Credit Ratings (ratings) is negative.
AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “bbb” (Good) of the members of Bankers Insurance Group (Bankers), which include Bankers Insurance Company (St. Petersburg, FL) and its property/casualty subsidiaries, Bankers Specialty Insurance Company (Metairie, LA) and First Community Insurance Company (St. Petersburg, FL). The outlook assigned to these Credit Ratings (ratings) is negative.
The ratings reflect Bankers’ balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).
The negative outlooks reflect pressure faced by material surplus deterioration over the past five-year period and inconsistent loss reserve development as it pertains to overall balance sheet strength. Severe weather unfavorably impacted Bankers’ operating performance in a few years, most recently with the winter storm in Texas occurring earlier in the year, which has led cumulatively to significant erosion in Bankers’ surplus position. Collectively, the observed impacts generate concern regarding the efficacy of Bankers’ ERM program against current and emerging risks.
Bankers provides personal property coverage in Florida, Louisiana and Texas, all of which expose the group to severe weather events associated with coastal states. Social inflation pressure specifically in Florida, and rising reinsurance costs have challenged the group’s performance further. Management has responded by implementing a number of corrective actions including the non-renewal of problematic risks, discontinuation of non-core lines of business and adjustment of reinsurance coverage in an effort to combat the recent trends in storm frequency and severity. AM Best expects these efforts to moderate exposure, improve risk-adjusted capitalization and stabilize surplus over the near term.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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