AM Best Downgrades Credit Ratings of Utica First Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Rating to “a-” (Excellent) from “a” (Excellent) of Utica First Insurance Company (Utica First) (Oriskany, NY). The outlook of these Credit Ratings (ratings) has been revised to stable from negative.

The ratings reflect Utica First’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The rating downgrades reflect deterioration in Utica First’s operating performance as recent results have been challenged by various market and social inflation conditions, as well as weather-related events. As a result, the company had underwriting losses in each of the past five years and pre-tax operating losses in three of the past five years, which has driven total return metrics to be negative. In addition, other operating performance metrics are aligned with marginally rated companies within the commercial casualty composite.

The revised outlooks to stable from negative reflect Utica First’s balance sheet assessment of very strong, supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), prudent investment portfolio and strong liquidity measures. In addition, the company has implemented numerous underwriting actions and rate actions to combat the decline in results. As a result, it is expected that operating metrics will stabilize and remain in line with the marginal assessment.

AM Best assesses Utica First’s business profile as neutral due to its strong position in its target market that includes business owners, specifically small restaurants, and the artisan line of business. AM Best assesses Utica First’s ERM as appropriate supported by a developed risk framework and formalized risk appetite and tolerance statements.

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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