AM Best Revises Outlooks to Positive for Keswick Guaranty, Inc.

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” (Good) of Keswick Guaranty, Inc. (Keswick) (U.S. Virgin Islands).

The Credit Ratings (ratings) reflect Keswick’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The positive outlooks reflect Keswick’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), low underwriting leverage, and prudent reinsurance program. Keswick has added to its surplus in four of the past five years, mainly due to net investment income and to a lesser extent realized and unrealized capital gains. The company maintains sound reinsurance protection as reflected in a net probable maximum loss of approximately 5% of policyholder surplus in the event of 1/250 year storm. The company does have a moderate amount of equity exposure as common stocks account for approximately 27% of policyholder surplus.

Keswick operates exclusively in the U.S. Virgin Islands, where the company historically wrote only commercial auto liability policies. However, in recent years, the company has expanded its product offerings to include low limit liability, comprehensive and collision coverage for personal auto. Underwriting results have been somewhat inconsistent in recent years as losses and expenses have both increased during this planned product and premium expansion.

If the company can maintain its strongest level of risk-adjusted capitalization, favorable underwriting leverage measures and adequate operating performance as it continues to execute this premium and product expansion, it could result in an upgrade in the Keswick’s balance sheet strength assessment.

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