OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a” from “a-” for both members of the PURE Group of Insurance Companies (PURE): Privilege Underwriters Reciprocal Exchange and PURE Insurance Company. The outlook of these Credit Ratings (ratings) has been revised to stable from positive. Both companies are domiciled in Fort Lauderdale, FL.
The ratings reflect PURE’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
PURE’s balance sheet reflects the group’s improved risk-adjusted capitalization, predominantly as a result of strong growth in policyholder surplus, along with enhancements to the catastrophe reinsurance. Surplus growth in 2018 was significantly impacted by an accounting change approved by the Florida regulator, which allowed for deferred acquisition costs to be reduced by a portion of unearned attorney-in-fact fees, due to their related party status. Additional financial flexibility is provided through PURE’s parent company and outside sources, as well as from subscriber surplus contributions that are anticipated to continue as new business is generated and retained over several years. Partially offsetting these positive factors are the group’s increased reinsurance cessions and significant growth in direct written premiums.
PURE has also reported improved operating performance in recent years largely due to net loss ratios that compare favorably with industry averages. The group’s elevated expense ratio is largely a function of the attorney-in-fact fees paid to affiliate PURE Risk Management, LLC. However, the year to date expense ratio also reflects a one-time impact of the large cession of unearned premium under a newly implemented 60% whole account quota share contract effective June 1, 2018. While there has been some weather-driven volatility in results, the core book of business has performed well, primarily due to underwriting discipline and rate actions.
The stable outlooks reflect A.M. Best’s expectation that the group’s rating fundamentals will remain unchanged over the short to medium term.
This press release relates to Credit Ratings 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 see A.M. 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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.
Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
