AM Best Upgrades Credit Ratings of One Alliance Insurance Corporation

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has upgraded the Financial Strength Rating to B++ (Good) from B+ (Good) and the Long-Term Issuer Credit Rating to “bbb” (Good) from “bbb-” (Good) of One Alliance Insurance Corporation (One Alliance) (San Juan, Puerto Rico). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

The ratings reflect One Alliance’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 rating upgrades reflect the revision of the ERM assessment to appropriate from marginal, reflective of management’s commitment to strengthen ERM’s capabilities in recent years. These actions include more stringent underwriting standards, improved reserving and claims procedures for catastrophe events, enhanced governance capabilities, exposure management and deterministic stress testing. These enhancements and management’s commitment to strengthening the ERM program have shown improved profitability and stabilization of results in recent years, showing the company’s ability to manage risks and closely align capabilities with its risk profile. Although catastrophe reinsurance protection is purchased above the modeled 1:250 return period, there is significant tail risk, as measured by Best’s Capital Adequacy Ratio (BCAR) at the 99.8% VaR confidence level.

One Alliance’s balance sheet strength assessment is supported by the strongest level of risk-adjusted capitalization, as measured by BCAR, a conservative investment portfolio and favorable reserve development.

These positive factors are partially offset by elevated leverage measures and reinsurance dependence. Operating performance is adequate, driven by favorable return metrics, which compare favorably to the commercial property composite. The company’s business profile is limited due to its geographic concentration in Puerto Rico, which exposes policyholder surplus to weather-related losses, strong competition and regulatory challenges.

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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