AM Best Upgrades Issuer Credit Rating of One Alliance Insurance Corporation

OLDWICK, N.J.--()--AM Best has upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb+” from “bb” and affirmed the Financial Strength Rating of B (Fair) of One Alliance Insurance Corporation (One Alliance) (San Juan, Puerto Rico). The outlook of these Credit Ratings (ratings) has been revised to stable from negative.

The ratings reflect One Alliance’s balance sheet strength, which AM Best categorizes as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).

The upgrade of the Long-Term ICR is based on significant growth in One Alliance’s surplus in 2019, primarily driven by a capital contribution provided by the company’s new owners. The capital infusion and anticipated on-going parental support mitigate AM Best’s previous concerns regarding the company’s capital position. Additionally, AM Best also has revised the outlooks to stable from negative, largely driven by the company’s improved underwriting leverage measures (gross, ceded and net) driven by the aforementioned capital infusion and demonstrated improved financial flexibility.

One Alliance’s balance sheet strength is reflective of its strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), conservative investment portfolio and new ownership commitment to support the company’s growth. These positive factors are offset partially by the company’s considerable catastrophe exposure and limited scale of operations.

AM Best categorizes One Alliance’s operating performance as marginal. The company reported underwriting loss in each of its first four years of operations. However, in each year, the company’s results have improved due to increased premium volume, as it tries to reach economy of scale. In 2019, operating performance was impacted by adverse development on its Hurricane Maria claims, affecting the company’s combined ratio.

One Alliance’s business profile is limited due to its geographical concentration in Puerto Rico, which exposes results to weather-related events and overall macro-economic conditions on the island, as well as to regulatory and competitive market challenges. AM Best assesses the company’s ERM assessment as marginal, as its risk management capabilities do not align with its risk profile. Demonstrated weakness has been observed given the level of catastrophe losses relative to prior reinsurance purchasing decisions for the enterprise. While the losses associated with Hurricane Maria were unprecedented in nature, the size of the losses lead to a marginal assessment.

This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Brian O’Larte
Director

+1 908 439 2200, ext. 5138
brian.o'larte@ambest.com

Richard Attanasio
Senior Director
+1 908 439 2200, ext. 5432
richard.attanasio@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Contacts

Brian O’Larte
Director

+1 908 439 2200, ext. 5138
brian.o'larte@ambest.com

Richard Attanasio
Senior Director
+1 908 439 2200, ext. 5432
richard.attanasio@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com