AM Best Upgrades Credit Ratings for Kentucky Associated General Contractors Self Insurers’ Fund

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 Kentucky Associated General Contractors Self Insurers’ Fund (KYAGC or the Fund) (Louisville, KY). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

The ratings reflect KYAGC’s 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 ratings upgrade reflects the sustained improvement in KYAGC’s balance sheet strength, which is supported by its risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The improved assessment is the result of several factors: strong surplus growth over the past five-year period; decreasing underwriting leverage; maintenance of a solid reinsurance program with a manageable retention; and continued financial flexibility to assess members, which has never been triggered. In addition, the ratings recognize KYAGC’s revised dividend plan that specifies surplus targets in the declaration process to ensure adequate capitalization, allowing for prospective growth.

The ratings also reflect the Fund’s prudent risk management strategies, which include strong underwriting guidelines and loss control measures. The strategies have contributed to sustained operating earnings that continue to outperform the workers’ compensation industry composite on a pre-dividend basis. Furthermore, the Fund’s investment portfolio has generated above average investment returns that have supported organic surplus growth over the past five years.

The Fund’s limited business profile reflects geographic concentration and the niche focus of its monoline, single state operations, with potential exposure to unfavorable economic, legislative and regulatory changes within Kentucky. The Fund provides workers’ compensation coverage to approximately 3,600 construction-related contractor members. AM Best considers the Fund’s ERM framework and risk management capabilities to be appropriate for its risk profile.

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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