AM Best Assigns Credit Ratings to Riverfront Insurance, LLC

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)--
AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating “a-” (Excellent) to Riverfront Insurance, LLC (Riverfront) (Wilmington, DE). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Riverfront’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings also benefit from explicit support from its parent, Navient Corporation (Navient) [NASDAQ: NAVI].

Riverfront is a single parent captive of Navient, a provider of education loan management and business processing solutions for education, health care, and government clients at the federal, state and local levels. Riverfront was domiciled in Delaware in 2020 and writes, on a direct-claims-made basis, error and omission (E&O) and director and officer (D&O) coverage only for its parent.

Riverfront’s balance sheet strength is supported by its strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), offset by a high annual aggregate retention level relative to surplus. The parent bolsters the company’s balance sheet with a Net Worth Maintenance Agreement to be used when and if necessary. AM Best assesses Riverfront’s prospective operating performance as adequate based on company projections and a third-party feasibility study in establishing the captive. Riverfront was born in response to hard market conditions for D&O and E&O coverage from a readily scrutinized parent with roots in the student loan industry. As the parent transitions its profile away from its role as a servicer for the Federal Direct Student Loan program and toward a consumer finance and business processing solutions company, it still remains susceptible to claims from its legacy private student loan portfolio. However, that risk is mitigated as Riverfront writes claims-made policies covering claims reported in the policy year of coverage (none to date). Riverfront’s ERM is integral to Navient from whence it originated to cover a portion of potential exposure subjected to market pricing and conditions. Riverfront does not use reinsurance.

The stable outlooks reflect AM Best’s expectation that the company’s operating performance will remain stable, in line with its own projected loss probabilities, thereby sustaining supportive, risk-adjusted capitalization. It also reflects AM Best’s expectation that Navient’s support for the captive will not change. Negative rating action could occur if surplus or risk-based capitalization precipitously declines due to a higher-than-expected number of material filed claims or if underwriting results and operating performance are materially weaker than projected. Negative rating action also could occur if Navient’s credit profile is lowered or there is any lessening in the parent’s ability or willingness to support the company either implicitly or explicitly.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.