A.M. Best Removes From Under Review With Negative Implications and Downgrades Credit Ratings of One Alliance Insurance Corporation
The ratings were placed under review with negative implications on
The rating actions are due to the significant decline in the company’s policyholder surplus since the start of operations, driven by poor underwriting and operating performance. Additionally, the rating actions reflect the limited financial flexibility and the uncertainty regarding the execution of its business plan and support of its primary shareholder.
The ratings reflect One Alliance’s balance sheet strength, which
One Alliance’s balance sheet strength is reflective of its conservative investment portfolio, solid liquidity measures and comprehensive reinsurance program. These positive factors are offset by the company’s limited financial flexibility and scale of operations.
One Alliance’s operating performance is categorized as marginal. As a relatively new startup (late 2015), its operating earnings and return measures are distorted and provide limited insight. The company reported an underwriting and operating loss in each of the first two full years of operations. However, in each year, the company’s results have improved due to its increased premium volume, as it tries to reach economies of scale. The management team scaled back its 2018 premium growth plan based on the lack of financial support. In 2017, the company’s underwriting performance was impacted by the two major hurricanes (Maria and Irma), which contributed nearly 25 points to its combined ratio.
One Alliance’s business profile is limited due to its geographical concentration in
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and
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Brian O’Larte, +1 908-439-2200, ext. 5138
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