AM Best Revises Outlooks to Stable for Ategrity Specialty Holdings LLC and Its Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of Ategrity Specialty Insurance Company (ASIC) and its affiliate, Sequentis Reinsurance Company Limited (Sequentis Re). Concurrently, AM Best has revised the outlook to stable from negative and affirmed the Long-Term ICR of “bbb-” (Good) of their holding company, Ategrity Specialty Holdings LLC (Ategrity). Ategrity and ASIC are domiciled in Wilmington, DE, USA, while Sequentis Re is domiciled in Hamilton, Bermuda.

The Credit Ratings (ratings) reflect Ategrity’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 revision of ASIC and Sequentis’ outlooks to stable reflects Ategrity management’s ability to execute on its strategy focused on reducing underwriting volatility and improving underwriting profitability by limiting exposure to property catastrophe lines of business, which had pressured operating earnings before 2022. Pivoting away from more volatile business and focusing on medium-sized commercial clients has resulted in improved underwriting results and favorable net income during 2022. Ategrity’s loss ratio has continued to improve through the first nine months of 2023, primarily driven by the business mix shift coupled with rate increases. Prospective improvement of the group’s operating profitability is dependent on management’s ability to continue to execute on its business plan with a greater focus on lines of business that have less inherent volatility and more profitability. The group’s investment performance has been accretive to results as the alternative investment portfolio employed by Ategrity continues to outperform comparable benchmarks.

Ategrity exhibits a very strong level of balance sheet strength considering the execution risk inherent in the group’s operations. The group’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is at the strongest level. While Ategrity has grown more than originally projected over the past three years, capital levels have kept pace with the increased premium volume, including the losses associated with outsized catastrophe losses experienced by property exposures in earlier years. AM Best expects Ategrity to manage its capital closer to its strategic targets, and for the balance sheet strength level to be maintained at the very strong level based on the improving operating results and the company’s capital management strategy.

Ategrity, through its U.S. operating subsidiary, ASIC, began writing excess and surplus lines of business late in 2018. The group’s business profile is considered limited given its start-up status and shifting business mix, although management has strong existing industry relationships. The company is enhancing its ERM program, which is expected to lead to greater stability in its underwriting results.

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