OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has assigned a Financial Strength Rating (FSR) of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” to BlueShore Insurance Company (BlueShore). Concurrently, A.M. Best has assigned an FSR of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” to Puritan Life Insurance Company of America (Puritan Life), the life insurance affiliate of BlueShore. The outlooks assigned to these Credit Ratings (ratings) are stable. BlueShore and Puritan Life are headquartered in Tempe, AZ, and are sister companies and subsidiaries of Verde Investments, Inc.
The ratings reflect BlueShore’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings also recognize the favorable impacts that are expected to be realized over the next several years as BlueShore transitions from a first-dollar insurance provider to a default risk liability insurer. The ratings reflect BlueShore’s captive orientation, albeit principally concentrated on two auto dealers whose business is subject to economic cycles, car sales, lending (credit) and residual values. As a result, BlueShore’s business is subject to these same external factors. The company’s primary product is contractual liability insurance, written on a default basis, covering vehicle service contracts (VSC), vehicle protection products (VPP) and guaranteed asset protection (GAP) contracts sold or administered by an affiliated or third-party administrator on behalf of its affiliated auto dealers nationwide.
The ratings of Puritan Life reflect its balance sheet strength, which A.M. Best categorizes as strong, as well as its adequate operating performance, adequate business profile and appropriate ERM. The ratings also consider Puritan Life’s risk-adjusted capitalization, which is maintained at the strongest level, as measured by Best’s Capital Adequacy Ratio, its creditworthy and diversified suite of insurance and annuity products that were recently rolled out and its favorable geographic footprint. Puritan Life is marketing ordinary life insurance and fixed and indexed annuities, as well as Medicare supplement insurance, on a national scale through two separate distribution channels.
Despite Puritan Life’s balance sheet strength assessment of strong, A.M. Best notes the low level of absolute capital and increasing exposure to less liquid investments in its general account, including asset-backed securities and commercial mortgage loans. In addition, A.M. Best notes that the company has a mismatch on the duration of its assets and liabilities, which results in increased reinvestment risk. Finally, A.M. Best believes that execution risk remains somewhat elevated due to the new business strategy and new management team.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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