The ratings reflect Genseg’s strong risk-based capitalization and profitable operation. Historically, Genseg has been able to increase capital and achieve favorable results given its sound but volatile underwriting results, consistent inflow of investment income and experienced management team. Moreover, the company’s financial strength is enhanced by its solid reinsurance program.
Partially offsetting these positive rating factors is the volatility in Genseg’s results, mainly arising from its exposure to catastrophic risks within its agricultural line of business. Additionally, loss ratios in the motor segment have deteriorated.
Genseg initiated operations in
Genseg’s capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is strong and supportive of the ratings. The company consistently has increased capital and surplus at a compound annual growth rate of 5.7% over the past five years. The company’s capitalization is further supported by its reinsurance program with highly rated entities. The company’s strong capitalization and liquidity have provided Genseg with flexibility in order to cover deviations in claims or volatile securities market conditions without having to realize losses in its investment portfolio.
In 2015, Genseg’s profitability was supported mainly by investment income and underwriting earnings from its health and life business.
In the past, volatility in Genseg’s results was derived from its exposure to catastrophes risks from its agricultural line of business, which the company has mitigated over time through adjustments in its reinsurance structure. Additionally, the performance of motor insurance during 2015 deteriorated as a result of weakened underwriting practices mainly from its trucking book of business. The company has tightened its underwriting practices in order to improve its operating performance and in this sense,
Factors that may trigger positive rating actions include stable profitability metrics performing in line with higher rated peers and good short-term performance in its motor business. The company’s current ratings could come under pressure should soft market conditions continue and a lack of underwriting discipline results in its underwriting and overall profitability falling short of expectations or if capitalization is no longer supportive of the current ratings.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- A.M. Best’s Ratings On a National Scale (Version
Sept. 5, 2014)
- Analyzing Insurance Holding Company Liquidity (Version
March 25, 2013)
- Catastrophe Analysis in A.M. Best Ratings (Version
Nov. 3, 2011)
- Evaluating Country Risk (Version
May 2, 2012)
Insurance Holding Companyand Debt Ratings (Version May 6, 2014)
- Rating Members of Insurance Groups (Version
Dec. 15, 2014)
- Risk Management and the Rating Process for Insurance Companies (Version
April 2, 2013)
- Understanding Universal BCAR (Version
April 28, 2016)
View a general description of the policies and procedures used to determine credit ratings. For information on the meaning of ratings, structure, voting and the committee process for determining the ratings and monitoring activities, please refer to “Understanding Best’s Credit Ratings.”
- Previous Rating Date:
July 17, 2015
- Date of Financial Data Used:
Sept. 30, 2016
This press release relates to rating(s) that have been published on
While the information obtained from the material source(s) is believed to be reliable, its accuracy is not guaranteed.
A.M. Best’s credit ratings are independent and objective opinions, not statements of fact.
Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.
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