OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has upgraded the Financial Strength Rating (FSR) to A (Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” from “a-” of Housing Specialty Insurance Company, Inc. (HSIC). The outlook of these Credit Ratings (ratings) has been revised to negative from stable. Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” of Housing Authority Property, A Mutual Company (HAPI), Housing Authority Risk Retention Group, Inc. (HARRG), and Housing Enterprise Insurance Company, Inc. (HEIC), the members of HAI Group. The outlook of these ratings remains negative. All companies are domiciled in Burlington, VT.
The rating upgrades of HSIC reflect the implicit and explicit support provided by the HAI Group as a new member of the group. HSIC is an excess and surplus carrier licensed in multiple states that provides non-traditional insurance products to public and affordable housing providers throughout the United States. Currently, HSIC writes coverage in Florida for public housing authorities and affordable housing providers, but the company has been preparing all through 2017 to expand its business to 41 states. HSIC is fully integrated into the group's operations and management, and is a subsidiary of HARRG and HAPI (50% ownership each) with 100% shared management. HSIC is material to the business profile and mission of the group.
The rating affirmations of HAI Group reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its marginal operating performance, favorable business profile and appropriate enterprise risk management (ERM). The ratings also factor in HAI Group’s recent management actions to enhance the balance sheet strength, improve operating results and expand the business profile by including HSIC as a group member. A.M. Best notes that the balance sheet strength is assessed at the strongest level despite leadership changes in recent years. Additionally, the investment portfolio has remained conservative despite the low interest rate environment, and has been enhanced by expanded risk management practices to hedge further interest rate changes and equity market volatility. The operating performance is viewed as marginal as the company has reported underwriting losses in the most recent five-year period. More recently, management has improved underwriting on current products to support increasing profitability and discontinued some unprofitable projects to manage results. The favorable business profile benefits from the strong market position of HAI Group, as well as the group’s increased diversification through HSIC as its growing excess and surplus carrier. The group’s ERM is categorized as appropriate given the organization’s strong risk management capabilities that support the elevated risk profile and the expanding complexity of the organization.
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