OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Pacific Indemnity Insurance Company (Pacific Indemnity) (Guam).
The Credit Ratings (ratings) reflect Pacific Indemnity’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
The revision of Pacific Indemnity’s outlooks to positive from stable reflect the company’s consistent growth in the capital base through core functions, while also maintaining moderate underwriting leverage and favorable loss reserve development positions. Additional positive factors of Pacific Indemnity’s balance sheet strength include favorable liquidity metrics and a conservative investment portfolio, which minimizes the company’s risks to market volatility. In 2023, Guam was impacted by Typhoon Mawar, which was the most severe weather event since 2002. Despite this event, Pacific Indemnity reported operating income of $1.1 million and would have reported capital growth if not for a change in the interpretation of the Guam Insurance Code, which required the company to non-admit real estate property other than for home office purposes, creating a one-time impact on the company’s surplus position of $1.4 million.
The very strong balance sheet assessment is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to remain consistent. Pacific Indemnity’s strong operating performance assessment is backed by consistent operating results, which outperform composite averages with the company reporting underwriting gains in each of the past 10 years. The limited business profile assessment reflects the narrow scope of operations concentrated in Guam with some lesser exposure within the Federal States of Micronesia and Palau. AM Best assesses Pacific Indemnity’s ERM program as appropriate, which includes a comprehensive reinsurance program that mitigates severe weather events, as illustrated with Typhoon Mawar in 2023.
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.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
Copyright © 2024 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
