OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating B++ (Good) and the Long-Term Issuer Credit Rating “bbb” of Connecticut Attorneys Title Insurance Company (CATIC) (South Burlington, VT).
These Credit Ratings (ratings) reflect CATIC’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The revised outlooks are driven by the company’s five-year average operating returns and AM Best’s expectation that future returns may be constrained by the recent macroeconomic environment, which could shift CATIC’s operating performance assessment to “marginal” from “adequate”, depending on CATIC’s year-end 2020 operating results. AM Best believes headwinds caused by weaker than expected macroeconomic conditions potentially could slow growth in the latter part of 2020, which could be problematic for CATIC if its business activity diminishes. On a positive note, low interest rates have prompted a steep acceleration in refinancing activity during the first quarter of 2020, which could help offset the effects of a recession and economic slowdown.
CATIC’s balance sheet is considered strong, and supported by its level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best is somewhat concerned with CATIC’s rapid expansion over the past five years and management’s ability to effectively control this growth as it expands into new states and appoints new agents. The company has minimal exposure to common equities and therefore limited exposure to the recent downturn in the equities markets. CATIC benefits from its specialty niche business orientation but is considered to have a limited business profile due to its heavy product and geographic concentration. Lastly, AM Best views CATIC’s ERM as appropriate as management has identified its key risks, established risk tolerances and is actively pursuing ways to minimize risk and to formalize the underlying risk management components.
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