A.M. Best Co. has downgraded the financial strength rating (FSR) to C (Marginal) from B (Fair) and issuer credit ratings (ICR) to "ccc" from "bb" of Safe Harbor Insurance Company (Safe Harbor) (Tallahassee, FL).
The outlook for both ratings is negative. Concurrently, A.M. Best has withdrawn the ratings in response to Safe Harbor management's request to no longer participate in A.M. Best's interactive rating process.
The rating actions consider Safe Harbor's declining risk- adjusted capitalization, resulting from a significant increase in its elevated underwriting leverage position caused by a 104 percent increase in net written premiums in 2011. Additionally, the ratings consider the company's geographic concentration of risk, susceptibility to weather-related events as a Florida property writer and its elevated underwriting expense ratio.
These negative rating factors are offset by Safe Harbor's favorable operating performance since inception and implicit support from its new parent, RM Ocean Harbor Holding, Inc. The negative outlook reflects concern about Safe Harbor's susceptibility to multiple severe weather-related events.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides an explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; "Rating Members of Insurance Groups"; and "Insurance Holding Company and Debt Ratings." Best's Credit Rating Methodology can be found at ambest.com/ratings/methodology.
A.M. Best Company is an insurance rating and information source.
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