OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bb” from “bb+” and affirmed the Financial Strength Rating (FSR) of B (Fair) of One Alliance Insurance Corporation (One Alliance) (San Juan, Puerto Rico). The outlook of the Credit Ratings (rating) has been revised to negative from stable.
The ratings reflect One Alliance’s balance sheet strength, which AM Best categorizes as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).
The rating action is based on the magnitude of Hurricane Maria losses relative to the premium written in the start-up phase of the company’s development. With continued loss development, ultimate losses from Hurricane Maria are approaching the company’s available reinsurance protection. Accordingly, AM Best has revised the assessment of One Alliance’s ERM to marginal, as the risk management capabilities do not align fully with the company’s risk profile. While management is refining and enhancing the company’s overall ERM framework and capabilities, the ultimate effectiveness of these changes remains uncertain.
Lastly, AM Best also has revised the outlooks to negative from stable, reflecting the company’s elevated gross and ceded underwriting leverage, which puts pressure on its risk-adjusted capitalization.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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