OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of BlueShore Insurance Company (BlueShore) (Dallas, TX).
The Credit Ratings (ratings) reflect BlueShore’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The positive outlooks reflect AM Best’s view and expectation that the improvements in BlueShore’s underwriting performance and profitability over the most recent five-year period are sustainable and could lead to a higher assessment. The company’s enhanced underwriting and operating performance metrics now outperform its industry peers and can be attributed to management’s decision to transition the company to being primarily a writer of default-based contractual liability insurance policies (CLIP) from previously being a first-dollar writer. Since BlueShore implemented this change in business strategy in 2017, the company has produced highly profitable operating results on a consistent basis. Ultimately, default policies carry minimal risk to BlueShore, as the company is obligated to pay claims only in the event that its affiliated obligors’ defaults or fails to perform on its contractual obligations related to its auto warranty product offerings.
BlueShore’s balance sheet is supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), diversified investment portfolio and the explicit support it receives from its parent company. The company’s limited business profile reflects its significant product concentration and narrow market position. AM Best considers the company’s ERM program to be appropriate for the size and scope of its operation.
Positive rating action may occur if operating performance continues to compare favorably to similarly assessed peers, reflecting strong operating performance, while maintaining support of its very strong balance sheet strength assessment. Negative rating action could occur following a material deterioration in the level of BlueShore’s risk-adjusted capitalization or any additional balance sheet components.
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