AM Best Affirms Credit Ratings of Constitution Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Constitution Insurance Company (Constitution) (Cambridge, NY). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Constitution’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). Constitution is wholly owned by Steven Menzies, chief executive officer, and participates in a quota share reinsurance transaction of workers’ compensation business from a commonly owned insurer, Continental Indemnity Company, consolidated within the North American Casualty Group. This reinsurance agreement was not renewed in 2025, as Constitution is entering a new treaty with another affiliated insurer, which includes the affiliated company’s financial lines business. The treaty is retroactive to January 1, 2025, though the agreement is awaiting regulatory approval.

Constitution is well-capitalized on a risk-adjusted basis as of year-end 2024 and holds no debt on its balance sheet. The company maintains a conservative investment portfolio composed of approximately 10% high quality long-term bonds with the remaining invested assets in real estate, cash and cash equivalents, as well as other invested assets. Constitution has historically favored cash in its investment portfolio; although it has acquired more longer duration fixed income investments to take advantage of the higher interest rate environment over the last three years. As these assets reached maturity, they’ve been reinvested in cash.

Constitution’s evolving business profile has resulted in volatility in performance metrics over the last several years, but these have largely trended in a favorable direction as operations stabilized. Combined ratios prior to the workers’ compensation treaty were less favorable and were driven primarily by low premium volumes, as the company transitioned to its current business plan. This occurred in 2025 as well, though once the new treaty is fully in place results are expected to stabilize rapidly.

Constitution’s business profile maintains some geographic and product concentrations, though the quota share contracts assumed from a related party have alleviated concerns to some degree as it has increased diversification and improved overall performance.

Constitution’s ERM practices are appropriate for its size and scope. Risk management is a focal point for management, and the company is well-attuned to the risks impacting its markets. The company maintains well-established conservative underwriting guidelines that have been historically profitable.

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