AM Best Revises Issuer Credit Rating Outlook to Negative for Chautauqua Patrons Insurance Company

OLDWICK, N.J.--()--AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb+” of Chautauqua Patrons Insurance Company (Chautauqua) (Jamestown, NY). The outlook of the FSR remains stable.

The Credit Ratings (ratings) reflect Chautauqua’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).

The revised outlook of the Long-Term ICR reflects the minimal effectiveness of the company’s ERM program, which has placed pressure on the current assessment of appropriate. The outlook change further reflects Chautauqua’s ongoing marginal operating performance and AM Best’s concerns regarding the company’s recent growth in commercial lines relative to the total book of business, which poses additional execution risk. However, based on Chautauqua’s volatile earnings performance over the past 10 years, additional time is needed to further observe the appropriateness of the ERM framework and risk management capabilities relative to its risk profile.

Chautauqua’s very strong balance sheet is supported by risk-adjusted capitalization assessed at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), conservative investment portfolio with strong liquidity measures and generally favorable loss reserve development trends. These strengths are partially offset by elevated common stock leverage as well as limited financial flexibility and scale. The operating performance assessment reflects marginal operating return measures over the past several years that trail the composite. The business profile assessment reflects limited geographic and product line diversification, which exposes the company’s results to potentially severe and frequent weather-related events, as well as regulatory and judicial challenges.

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.

AM Best is a global credit rating agency and information provider with an exclusive focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Maurice Thomas
Senior Financial Analyst
+1 908 439 2200, ext. 5794

maurice.thomas@ambest.com

Brian O’Larte
Director
+1 908 439 2200, ext. 5138
brian.o'larte@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Contacts

Maurice Thomas
Senior Financial Analyst
+1 908 439 2200, ext. 5794

maurice.thomas@ambest.com

Brian O’Larte
Director
+1 908 439 2200, ext. 5138
brian.o'larte@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644

james.peavy@ambest.com