OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of B+ (Good) and the issuer credit rating of “bbb-” of PrimeOne Insurance Company (PrimeOne) (headquartered in Agoura Hills, CA).
The revised outlook reflects PrimeOne’s projected declining trend in risk-adjusted capitalization for the next three years, as well as the significant execution risk surrounding the new ownership and management.
The ratings are based on PrimeOne’s adequate balance sheet capitalization as measured by Best's Capital Adequacy Ratio (BCAR), driven by the company’s moderate underwriting leverage and conservative investment profile, in addition to the company’s strong liquidity. Partially offsetting these factors are the company’s significant execution risk in implementing a turn-around strategy to produce positive earnings and capital appreciation, unfavorable operating performance since inception and its diminished market profile following the decision reached on May 2, 2014, to discontinue operations and go into run-off mode. The company was essentially restarted under new ownership and management with its purchase by Freyja Holdings, Inc. on Dec. 31, 2014. As a result, a new management team was installed and operations restarted in early 2015.
A.M. Best recognizes the potential for volatility in operating performance over the near term that could negatively impact PrimeOne’s balance sheet if there were unfavorable development on prior year loss reserves or if positive earnings do not materialize. As a single-state writer focused on only a few lines of business, the company’s business profile, since inception, has been relatively narrow.
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center.
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