OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb+” from “a-” of Saucon Insurance Company (Saucon) (Bethlehem, PA). The outlook of these Credit Ratings (ratings) remains stable.
The ratings reflect Saucon’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, very limited business profile and appropriate enterprise risk management.
The rating downgrades reflect a revision in AM Best’s assessment of Saucon’s business profile to very limited from limited, given the ongoing moratorium on new business since 2008 and continued erosion of perpetual policies in force. While a holding company structure was developed effective Jan. 1, 2018, there are no immediate plans to expand the scope of operations. Any change in strategic direction also would require additional expertise to properly evaluate new risks to the company.
As a perpetual homeowner writer, Saucon does not recognize policy deposits as premium revenue. Therefore, the evaluation of operating performance and the company’s ability to generate capital appreciation is focused on total investment returns. In recent years, investment income and capital gains have been volatile, as reflected in the company’s total return on invested assets and equity measures. AM Best expects continued strain on Saucon’s investment portfolio as a result of the low interest rate environment and volatile equity market.
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.
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