OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating (FSR) of B (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bb+” (Fair) of One Alliance Insurance Corporation (One Alliance) (San Juan, Puerto Rico). The outlook assigned to the FSR is stable, while the outlook assigned to the Long-Term ICR is negative.
The Credit Ratings (ratings) reflect One Alliance’s balance sheet strength, which AM Best assesses as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management.
The negative outlook on the Long-Term ICR reflects One Alliance’s weakened balance sheet strength. This is the result of the company’s aggressive growth strategy implemented in 2022, which resulted in increased underwriting leverage metrics, reinsurance dependence and overall decrease in its risk-adjusted capitalization. In addition, policyholder surplus has considerable exposure to weather-related events, which is intensified by higher reinsurance costs and increased retention levels. However, One Alliance’s capital adequacy is expected to improve starting in 2023, due to a $2 million capital contribution in first-quarter 2023, as well as the scaling back on its growth strategy with continued focus on profitability. Operating performance has improved over the last few years and this trend has continued through the first months in 2023. Management is expected to execute on its plans over the near term.
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