OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Financial Strength Rating to C++ (Marginal) from B++ (Good) and the Long-Term Issuer Credit Rating to “b” from “bbb+” of INTEGRAND Assurance Company (INTEGRAND) (San Juan, Puerto Rico). Concurrently, AM Best has maintained the under review with negative implications status for these Credit Ratings (ratings).
The rating downgrades reflect INTEGRAND’s balance sheet strength, which AM Best categorizes as weak, as well as its marginal operating performance, very limited business profile and marginal enterprise risk management (ERM).
AM Best views the company’s risk-adjusted capitalization as weak based on the continued exposure to disputed reinsurance recoverables, with heightened uncertainty regarding their ultimate resolution. Additionally, these rating actions follows a recent regulatory announcement from the Insurance Commissioner of Puerto Rico, which limits the company from actively writing new business in Puerto Rico, suspending any commission increases and several other activities over the near term
The ratings previously were downgraded and placed under review with negative implications on Nov. 29, 2018, in response to the company’s third-quarter statutory statement that reflected a sizable decline in policyholder surplus due to adverse development on losses related to hurricanes Maria and Irma of approximately $15 million. At that time, AM Best revised the assessment of INTEGRAND’s ERM to marginal. The assessment downgrade was driven by the size of the additional catastrophe losses relative to amounts previously disclosed to AM Best, which created uncertainty regarding the company’s ERM program.
As part of these latest rating actions, AM Best has revised its assessment of INTEGRAND’s business profile downward to very limited from limited, largely due to the regulatory restrictions under which the company must now operate. Furthermore, INTEGRAND’s operating performance assessment also was revised downward to marginal from adequate, driven by weak operating performance over the past few years, as the company’s operating return measures trails its peer and industry composites by a sizable margin.
These ratings will remain under review pending AM Best’s analysis of the company’s business plans.
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