A.M. Best Revises Outlook to Negative for Granada Insurance Company [Manufacturing Close – Up]

A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of Granada Insurance Company (Granada) (Miami, FL).

The revised outlook of Granada reflects its declining level of risk-adjusted capitalization, trend of operating losses over the past five years, adverse loss reserve development, elevated net underwriting leverage over the past two years and the challenges facing management to improve its operating performance.

The ratings for Granada acknowledge its adequate level of risk- adjusted capitalization, the explicit support it receives from its parent holding company, Hattbert Holdings, Inc., its established local market presence and strong agency relationships. Furthermore, the ratings recognize management's initiatives over the latest five- year period to significantly reduce property exposures and the resulting probable maximum loss from a 100-year hurricane event.

The ratings of the company may be negatively impacted if it continues to produce operating losses that further erode policyholders' surplus and/or risk-adjusted capitalization, as represented by Best's Capital Adequacy Ratio (BCAR).

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. 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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