OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has revised the outlook to negative from stable and affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” of ACMAT Corporation (ACMAT) (Farmington, CT) [OTC Market: ACMT]. A.M. Best also has revised the outlook to negative from stable for the Long-Term ICR and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a+” of ACMAT’s wholly owned subsidiary, ACSTAR Insurance Company (ACSTAR) (Chicago, IL). The outlook for the FSR remains stable.
The Credit Ratings (ratings) reflect ACSTAR’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The rating actions are based on a material reduction in ACSTAR’s premiums in recent years, which has led to a diminishing business profile. In addition, while results have historically benefited from management’s niche specialty orientation in the surety sector, prudent underwriting discipline and a conservative loss reserving philosophy, the trend of declining premiums has resulted in narrowed underwriting results in recent years. The negative trend in premiums partly reflects highly competitive market conditions in the niche.
Negative rating actions could occur if underwriting and operating results show a continued negative trend, if risk-adjusted capitalization materially weakens or if the company’s business profile further diminishes, evidenced by a continued downward trend in premiums. Positive rating actions could occur if the company exhibits a trend of improved underwriting performance combined with stable to higher premiums.
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