OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Pekin Select Insurance Company (PSIC) (Pekin, IL). The outlook assigned to these Credit Ratings (ratings) is stable. PSIC is a newly formed member of Pekin Insurance Group (Pekin).
The ratings reflect PSIC’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management.
The ratings also reflect the addition of PSIC to the group’s intercompany reinsurance pooling agreement, and PSIC’s strategic importance to Pekin. PSIC writes preferred workers’ compensation business. Additionally, the ratings reflect the execution risk associated with any new business that PSIC will underwrite.
The very strong balance sheet assessment reflects Pekin’s consolidated risk-adjusted capitalization, which is projected to remain at the strongest level over the near term, as measured by Best’s Capital Adequacy Ratio (BCAR). The marginal operating performance reflects Pekin’s below average underwriting performance primarily driven by increased catastrophe losses in recent years and a comparatively high expense structure. With that, management has instituted several profitability initiatives, including expanded use of predictive modeling, pricing changes and significant technology upgrades.
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