A.M. Best Revises Outlook to Negative for Specialty Risk of America

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Specialty Risk of America (SPRISKA) (Springfield, IL).

The rating actions reflect the deterioration in SPRISKA’s operating results in recent years, the continued adverse loss reserve development reported in the liquor liability line of business, and more importantly, the execution risk and challenges brought on by the recent change in ownership, management and the shift in the company’s overall strategic direction. The rating actions also consider SPRISKA’s expense ratio disadvantage driven by the high commissions paid to its immediate parent and managing general agent, Special Insurance Services, Inc. Other factors include SPRISKA’s significant reduction in surplus since being acquired in 2009, management’s planned product and geographic expansion coupled with near-term growth initiatives and the company’s ability to execute on them in light of today’s competitive market pressures.

Despite these actions, the ratings acknowledge SPRISKA’s moderate underwriting leverage and the action plans implemented by management to return the company to profitability. In light of these broad changes, the preservation of the current ratings is contingent upon SPRISKA’s near-term progress and management’s success in reversing the recent adverse trends in profitability and capitalization.

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.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Richelle Bryan
Financial Analyst
(908) 439-2200, ext. 5344
[email protected]
or
Joseph Roethel
Assistant Vice President
(908) 439-2200, ext. 5630
[email protected]
or
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
[email protected]
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
[email protected]

Source: A.M. Best Co.