AM Best Downgrades Alaska Timber Insurance, Inc.’s Credit Ratings – InsuranceNewsNet

ALDWICK, New Jersey—(BUSINESS WIRE)–
AM Best downgraded the Financial Strength Rating (FSR) to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to ‘bbb+’ (Good) from ‘a-‘ (Excellent) of Alaska Timber Insurance, Inc. (WE HAD) (Ketchikan, Alaska). The long-term ICR outlook has been revised to negative from stable, while the FSR outlook is stable.

The credit ratings (ratings) reflect the strength of ATI’s balance sheet, which AM Best rates as very strong, as well as its marginal operating results, limited business profile and appropriate corporate risk management.

The downgrade reflects ATI’s continued deterioration in net premiums written, which has put increased pressure on the company’s key underwriting ratios. The company has reported declines in premiums in each of the past five years, primarily resulting from reductions in NCCI’s loss costs, which the company uses to calculate premiums. This trend has accelerated in recent years, with ATI reporting double-digit percentage premium declines in each of the past three years, including further declines in the first half of 2022. The company experienced higher volatility in its underwriting results following policyholder dividends and also reports lower levels of total profits. Finally, lower premiums can also make paying dividends to policyholders more challenging, limiting their effectiveness as a retention tool.

The revision of ICR’s long-term outlook to negative from stable reflects pressure on the balance sheet valuation from the aforementioned issues related to the reduction of the company’s premium if further deterioration in operating results would erode the company’s surplus level. The strength of ATI’s balance sheet is supported by its risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR), which remains at its strongest level despite significant declines in the size of its surplus. The valuations also reflect the company’s limited business profile due to its concentrated geography and limited product offerings.

A negative rating action could occur if there is a material deterioration in risk-adjusted capitalization or surplus, or if the business profile narrows due to the company’s strategic changes.

This press release refers to the credit ratings that are published on the AM Best website. For all rating information relating to the release and relevant disclosures, including details of the agency responsible for issuing each of the individual ratings set out in this release, please see AM Best’s Recent assessment activity Web page. For additional information on the use and limitations of credit score opinions, please see Guide to Best Credit Ratings. For information on the proper use of Best’s credit ratings, Best’s performance ratings, Best’s preliminary credit ratings, and AM Best’s press releases, see A guide to the proper use of Best’s ratings and reviews.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquarters in United Statesthe company develops business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information visit www.ambest.com.

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Robert Gabriel
A financial analyst

+1 908 439 2200, ext. 5725

[email protected]

Dan Tecklow
Assistant Director

+1 908 439 2200, ext. 5394

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Christopher Sharkey
Manager, Public Relations

+1 908 439 2200, ext. 5159

[email protected]

Jeff Mango
Managing Director,

Strategic communications

+1 908 439 2200, ext. 5204

[email protected]

Source: AM Best

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