OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned a financial strength rating of B+ (Good) and an issuer credit rating of “bbb-” to One Alliance Insurance Corporation (One Alliance) (San Juan, Puerto Rico). The outlook assigned to both ratings is stable.
The ratings reflect One Alliance’s supportive risk-adjusted capitalization, efficient reinsurance structure and experienced management team. The ratings also reflect the benefits afforded by the company’s affiliated insurance agency, Niki Seguros, which provides One Alliance with immediate access to a profitable book of business with known loss experience that is expected to support profitable growth. The ratings also reflect the capital contributions received from its parent in support of planned premium growth during the initial five-year period, as well as the financial flexibility afforded by its immediate parent should additional capital be needed.
Partially offsetting these positive factors are Puerto Rico’s ongoing weak economic environment and the inability of the Commonwealth to grow the economy, which present challenges to One Alliance in executing on its business plans throughout the startup phase. Additional offsetting factors include the company’s limited business profile given its relatively small operational scale, which impacts expense ratios, and the geographic concentration to which One Alliance is exposed as all business is written within Puerto Rico. Other offsetting factors include the exposure to potentially catastrophic hurricane losses, which can affect both earnings and balance sheet strength should a large event occur, as well as an increased reliance on reinsurance to reduce insured exposures to a manageable net retention. In addition, the ongoing competitive market pressures could challenge the company’s ability to grow profitably as local insurers compete for market share, although this risk is somewhat mitigated by the aforementioned access to profitable business through its affiliated agency. Despite these concerns, the outlooks reflect the supportive capital position, as well as the expectation that overall capitalization remains supportive of the ratings based on projections for solid operating earnings over the near term given management’s conservative operating philosophy.
While positive rating actions are unlikely in the near term, positive rating actions could be taken in the future if underwriting and operating results prove strong and stay in line with projections, while maintaining a strong level of risk-adjusted capitalization.
Key factors that could trigger negative rating actions include a weakening in underwriting performance, an increase in catastrophe-related losses beyond expectations, a deterioration in loss reserves or significant growth beyond expectations.
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.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.