OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has maintained the under review with negative implications status for the Financial Strength Rating of B (Fair) and the Long-Term Issuer Credit Rating of “bb” of Weston Insurance Company (Weston) (Coral Gables, FL).
Weston remaining under review with negative implications is reflective of the execution risk associated with management’s revised plans to reduce financial leverage at the ultimate parent, Weston Insurance Holdings Corporation. Weston’s Credit Ratings (ratings) were placed under review with negative implications on Nov. 19, 2019, after management had communicated plans to reduce elevated pressure from increased financial leverage at the holding company, which is embedded in AM Best’s overall balance sheet assessment of Weston. While plans have been revised, due in part by the decision to purchase Anchor Specialty Insurance Company that required issuing additional debt during the under review timeframe, management remains committed to reducing financial leverage. The planned reduction of preferred shares via conversion into common equity carries significant execution risk for completion given the impending hurricane season and deviation from original deadlines. As a result, AM Best’s timeline regarding resolution of the under review status is now short term in nature. Should the conversion not be completed within the timeframe, as communicated by management, and financial leverage fail to be reduced to a level in line with revised plans, the ratings will be downgraded accordingly.
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