AM Best Upgrades Credit Ratings of Antilles Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating to “a” (Excellent) from “a-” (Excellent) of Antilles Insurance Company (Antilles) (San Juan, PR). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

These ratings reflect Antilles’ balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).

The rating upgrades reflect a revision of Antilles’ operating performance assessment to strong from adequate. The company has reported continued favorable underwriting and operating performance in recent years, despite modest volatility from weather-related events. Antilles’ strategic initiatives and favorable pricing environment have resulted in underwriting performance metrics that have outperformed its peer group over the last five years. Hence, the company’s operating metrics are more in line with other carriers that maintain the strong assessment for the operating performance building block. However, the company maintains an elevated expense ratio, which is largely driven by commission expense and remain in-line with peers domiciled in Puerto Rico.

Antilles’ very strong balance sheet strength assessment is based on its strongest level of risk-adjusted capitalization. as measured by Best’s Capital Adequacy Ratio (BCAR). and a relatively conservative investment portfolio comprised of predominantly fixed-income securities, diversified equity holdings and cash and short-term investments. The company maintains elevated common stock leverage, but the majority of the holdings are in exchange traded funds and mutual funds. In addition, the company maintains a comprehensive reinsurance program and stable loss reserving trends with generally favorable development on both an accident and calendar year basis. Partially offsetting these favorable factors is Antilles’ limited financial flexibility and scale of operations, as well as the payment of stockholder dividends to its parent.

Antilles’ business profile is assessed as limited due to its narrow geographic concentration in Puerto Rico, which exposes the company’s results to weather-related events and regulatory challenges. However, Antilles’ market position is supported by its management team’s extensive domestic market expertise. The company also benefits from an appropriate level of ERM, including a developed risk management framework and comprehensive reinsurance program.

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