AM Best has upgraded the Financial Strength Rating to A+ (Superior) from A (Excellent) and the Long-Term Issuer Credit Ratings to “aa-” (Superior) from “a+” (Excellent) of Capitol Indemnity Corporation, Capitol Specialty Insurance Corporation, both of Middleton, Wisconsin, and Platte River Insurance Company of Omaha, Nebraska, collectively known as CapSpecialty Insurance Group (CapSpecialty).
The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings reflect CapSpecialty’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
CapSpecialty’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), has been consistently maintained at the strongest level and benefits from the significant reinsurance agreements put in place with its affiliate National Indemnity Company, which reduced CapSpecialty’s net premium and reserve leverage ratios.
CapSpecialty’s investments are managed by Berkshire Hathaway Inc., and are expected to show, over time, an increase in allocations to common stocks with high intrinsic value, in accordance with Berkshire Hathaway Inc.’s investment philosophy, AM Best said.. Nonetheless, the portfolio is currently almost 100% invested in U.S. Treasury bills and investment income has been a strong tailwind for CapSpecialty’s operating earnings.
AM Best now assesses CapSpecialty’s operating performance as adequate. The upgrading of the ratings reflects AM Best’s view that underwriting actions taken by the group have led to improved underwriting results and reduced volatility that proved to be sustainable over time.
CapSpecialty’s underwriting metrics and overall profitability have been consistent with the levels of an adequate operating performance assessment and are projected to maintain their recent favorable trends for the foreseeable future.
Source: AM Best
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