AM Best Downgrades Credit Ratings of Pinnacle Consortium of Higher Education, A Vermont Reciprocal Risk Retention Group

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 Pinnacle Consortium of Higher Education, A Vermont Reciprocal Risk Retention Group (Pinnacle) (Colchester, VT). The outlook of these Credit Ratings (ratings) has been revised to negative from stable.

The ratings reflect Pinnacle’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.

The rating actions, as well as the negative outlooks, reflect a deterioration in the company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), primarily driven by the emergence of material adverse loss reserve development reported in 2024, 2025 and the potential for future adverse development in 2026. This adverse trend stems from the combination of increased loss costs associated with Pinnacle’s core general liability business and the expanded coverage limits, which resulted in increased loss severity and higher loss reserve leverage increasing the pressure on its overall capital adequacy. Forward-looking projections indicate improvement, but AM Best believes execution risk remains elevated.

Negative rating action could occur if Pinnacle’s risk-based capitalization materially weakens through continued adverse reserve development. Negative rating action also could occur if operating performance and profitability continue to erode, falling to levels deemed to be weaker than the company’s peers. Positive rating action could occur if and when reserves stabilize and overall risk-adjusted capitalization is restored to its historical levels, which would warrant a stronger balance sheet strength assessment.

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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