A.M. Best Assigns Ratings to Fair American Select Insurance Company [Health & Beauty Close – Up]

A.M. Best Co. has assigned a financial strength rating of A (Excellent) and issuer credit rating of "a+" to Fair American Select Insurance Company (FAIRCO Select) (Delaware).

The outlook assigned to both ratings is stable.

The assigned ratings are based on FAIRCO Select's recently executed quota share agreement with its parent company, Transatlantic Reinsurance Company (TransRe) (New York, NY). FAIRCO Select will cede 90 percent of all ongoing business to TransRe. FAIRCO Select and TransRe are both ultimately owned by Alleghany Corp.

FAIRCO Select will serve as a surplus lines carrier that will provide coverage alongside its immediate parent, Fair American Insurance and Reinsurance Company. The initial focus of FAIRCO Select will be on medical malpractice for psychiatrists, but going forward FAIRCO Select will focus on various primary lines of business. A.M. Best expects operating results to be profitable and risk-based capitalization to remain fully supportive of the company's business plan.

Due to the strong reinsurance arrangement with TransRe, FAIRCO Select could receive positive rating enhancement if TransRe's ratings are upgraded. Conversely, FAIRCO Select could experience negative rating actions if TransRe's ratings are downgraded.

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 ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

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