OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” from “a-” of Benchmark Insurance Company (BIC) (headquartered in Wayzata, MN). The outlook of these Credit Ratings (ratings) has been revised to stable from positive. AM Best also has assigned an FSR of A (Excellent) and the Long-Term ICR of “a” to American Liberty Insurance Company (ALIC) (Provo, UT). The outlook assigned to these ratings is stable. Additionally, BIC and its affiliate, ALIC, are collectively referred to as the group.
The rating assignment for ALIC reflects its affiliation with BIC under a 100% quota share agreement that was approved by state insurance regulators in Kansas and Utah. The group was formed as a result of ALIC’s acquisition by Benchmark Holding Company, which is owned by BIC’s ultimate parent, BIC Holdings LLC. ALIC was purchased to expand the group’s licensing authority in the Southwest, principally in Arizona, Nevada and Utah, and for ALIC to become a second issuing carrier for BIC’s program business.
The ratings reflect the group’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
AM Best assesses the group’s balance sheet strength as very strong, underpinned by risk-adjusted capitalization, as calculated by Best’s Capital Adequacy Ratio, at the strongest level. Additional positive factors include favorable liquidity, underwriting and operating cash flows, a conservative investment portfolio that has generated steady net investment income, and favorable loss and LAE reserve development over the past five years. Partially offsetting these positive factors is the group’s historical adverse reserve development related to its grocers’ program within its workers’ compensation book of business. However, this program has been cancelled and is no longer impacting the group’s results materially.
The group has generated a strong operating performance, bolstered by five consecutive years of increases in underwriting and investment income. Underwriting results have benefited from a disciplined selection of seasoned program partners and recent favorable loss reserve development trends on prior accident years. The group operates as a program writer and diversified insurance services provider of workers’ compensation business through managing general agents in 49 states. As an insurer focused on workers’ compensation, its limited business profile leaves it susceptible to adverse regulatory or judicial decisions in certain jurisdictions.
ERM capabilities are considered appropriate as the group maintains a formalized ERM process through its affiliate TREAN Corporation, which addresses the group’s overall risk profile with corresponding mitigation strategies.
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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