AM Best Downgrades Credit Ratings of Governmental Interinsurance Exchange

OLDWICK, N.J.--()--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 Governmental Interinsurance Exchange (GIE) (Bloomington, IL). The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect GIE’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 rating downgrades reflect a revision in AM Best’s assessment of GIE’s operating performance to marginal from adequate, given the deterioration of underwriting results over the most-recent five-year period. While initiatives have been put in place to limit severity exposures and non-renew select risks, results have not yet benefited from these actions.

GIE’s balance sheet strength reflects the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), high quality investment portfolio and generally favorable reserve development, partially offset by limited surplus growth and lack of financial flexibility.

GIE’s operating performance has trended downward in recent years, largely due to a spike in weather events and auto losses, as well as continued above-average expenses associated with the cost of litigation in defense of claims against policyholders, commissions and overhead, which have resulted in underwriting and operating performance metrics that trail the commercial casualty composite. GIE maintains a limited scale of operations, writing specialized business for local public entities in two states. AM Best views GIE’s ERM to be appropriate, with a management team that continues to develop and enhance ERM capabilities.

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, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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

Contacts

Steven DeLosa
Financial Analyst
+1 908 439 2200, ext. 5969
steven.delosa@ambest.com

Michelle Baurkot
Director
+1 908 439 2200, ext. 5829
michelle.baurkot@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

Steven DeLosa
Financial Analyst
+1 908 439 2200, ext. 5969
steven.delosa@ambest.com

Michelle Baurkot
Director
+1 908 439 2200, ext. 5829
michelle.baurkot@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