AM Best reports that it has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) for the members of Plymouth Rock Assurance Group (PRAG).
At the same time, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of “a-” (Excellent) of the members of Plymouth Rock Home Assurance Group (PRHAG). AM Best’s outlook of these credit ratings is stable.
According to AM Best analysts, the ratings of PRAG reflect its balance sheet strength, which they assess as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The revision in PRAG’s outlooks to positive from stable reflects its “solid market presence in the northeastern United States as a leading writer of private passenger auto (PPA) business, particularly in Massachusetts, as well as its diverse and well-managed distribution strategy and strong brand recognition as a part of the Plymouth Rock family.”
Although the group is geographically concentrated in Massachusetts, which exposes results to potentially frequent and severe weather, as well as regulatory impacts, AM Best notes that PRAG continues to improve its spread of risk and expand to states such as New York, Connecticut and Pennsylvania. While doing so, PRAG’s PPA market share in its primary state of Massachusetts has grown to over 8% “owing to profitable and effective business growth.”
Additionally,the group diversifies its product offerings through its wholly owned subsidiary, Pilgrim Insurance Co., which provides stability as a residual market servicing carrier.
“With continued refinement to the book of business, as well as effective growth that further diversifies the group’s geographic footprint and product offerings, near-term upward movement on the business profile assessment is likely,” AM Best continued. “The profile is further enriched by a robust distribution network and increased marketability through its affiliation with PRHAG and the ability to provide auto customers a packaged product.”
The ratings of PRHAG reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM.
AM Best said the stable outlooks for PRHAG reflect the group’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and consistency in policyholders’ surplus growth over the past five-year period, partially offset by adverse loss reserving trends in some recent years and historically high equity leverage.
“Furthermore, it reflects its adequate operating performance, which despite recent volatility remains supported by five- and 10-year average combined ratios that are slightly below the industry peer composite, and its risk management capabilities that align appropriately with its risk profile,” the ratings analysts continued.
While PRHAG also maintains strong brand recognition as a part of the Plymouth Rock family and operates under a well-managed distribution strategy, its limited business profile reflects the increased risk associated with the group’s property predominant offering of homeowners’-focused products. This, along with PRHAG’s geographic concentration in Massachusetts and smaller scale as compared to PRAG, exposes overall results to potential regulatory impacts and a higher degree of weather-related loss.
“Nonetheless, PRHAG continues to receive lift from PRAG, reflective of the strong relationship between the two groups, level of operational integration and strategic support provided by PRAG to PRHAG,” AM Best added.
The FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) have been affirmed, with the outlooks revised to positive from stable, for the following members of Plymouth Rock Assurance Group: Plymouth Rock Assurance Corp. of New York; Plymouth Rock Assurance Corp.; Plymouth Rock Assurance Preferred Corp.; Pilgrim Insurance Co. and Mt. Washington Assurance Corp.
The FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) have been affirmed with stable outlooks for the following members of Plymouth Rock Home Assurance Group: Plymouth Rock Home Assurance Corp.; Bunker Hill Insurance Casualty Co.; Bunker Hill Property Insurance Co.; Bunker Hill Insurance Co. and Bunker Hill Preferred Insurance Co.
Source: AM Best
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