AM Best revised the outlook from stable to negative and reaffirmed the financial strength rating of A- (excellent) and the issuer’s long-term credit rating of “a-” (excellent) of
These credit ratings (ratings) reflect the strength of Southern Trust’s balance sheet, which AM Best as very strong, as well as its adequate operational efficiency, limited business profile and proper corporate risk management (ERM).
The revised outlook for the stable reflects the growth of the Southern Trust’s capital in recent years, mainly driven by takeover revenues and capital gains. In addition, management has implemented several initiatives to limit the development of adverse loss reserves. These include the continued strengthening of reserves, as well as several internal changes in the handling of claims and the management of litigation. Overall, these efforts have begun to gain momentum and are expected to mitigate future adverse developments in the loss reserve. In addition, the company has implemented a 50/50 share reinsurance agreement covering its business lines for physical damage to passenger cars and commercial vehicles, which will provide additional relief in 2022.
Over the last three years, the Southern Trust’s operating results have been profitable, despite some instability due to weather events. The company’s insurance results have benefited from a variety of takeover initiatives, including interest rate hikes, improved takeover guidelines and re-checks. Southern Trust’s business profile is considered limited due to its narrow geographical focus and relative market position within its operational territory. Recent emphasis has been placed on improving the company’s geographical distribution within its operating territory and the controlled growth of its retail business. AM Best considers the Southern Trust’s ERM program to be appropriate for its size and scope of operations.
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Source: AM Best