AM Best Removes From Under Review With Negative Implications and Affirms The Credit Ratings of Southern Trust Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of Southern Trust Insurance Company (Southern Trust) (Macon, GA). The outlook assigned to these Credit Ratings (ratings) is negative.

The ratings reflect Southern Trust’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 affirmation of the Long-Term ICR reflects the successful execution of Arbour National LLC’s (Arbour) operational and capital solutions to support Southern Trust. As the new parent, Arbour remains deeply committed to incorporating its best practice standards into the entity, via strategic guidance, explicit capital support and incorporation of business partners that align closer with values and goals. A key component of the comprehensive plan included an additional capital contribution in third quarter 2024, which strengthened key balance sheet metrics to levels supportive of the current ratings. Additional strategies included enhanced underwriting and claims processes and exit of unprofitable lines of business. Collectively these actions combined with a refocused business strategy are expected to position Southern Trust for long-term profitability.

The negative outlooks reflect pressure on the operating performance assessment due to increased volatility in underwriting results in 2024. Results were impacted by material adverse reserve development and inflationary pressures that caused results to deviate from historical norms. Management aggressively cleaned up reserves and does not expect a material impact in the near term. The outlooks further reflect the potential for shifting enterprise risk mitigation strategies should recent enhancements to the ERM process not prove successful in managing risk across the organization.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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