AM Best Upgrades Credit Ratings of Members of Castle Key Group

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has upgraded the Financial Strength Rating (FSR) to B+ (Good) from B- (Fair) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb-” from “bb-” of the members of Castle Key Group (Castle Key) (Illinois). The outlook of these Credit Ratings (ratings) remains stable. (See below for a detailed listing of the companies.)

The ratings reflect Castle Key’s balance sheet strength, which AM Best categorizes as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The ratings upgrade is based on the improvement in Castle Key’s balance sheet strength, with consistent organic surplus growth and a strengthened catastrophe reinsurance program that now responds to more severe windstorm events. As a dedicated Florida property writer for its parent company, Allstate Insurance Company (Allstate), Castle Key maintains significant exposure to hurricanes, with a corresponding substantial reliance on catastrophe reinsurance.

Castle Key has posted operating profitability and surplus accumulation over the last several years despite periodic catastrophe losses brought on by hurricanes Hermine and Matthew in 2016, Irma in 2017 and Michael in 2018. Even with the losses associated with these storms, Castle Key did not suffer any material impact to the group’s risk-adjusted capital position.

The ratings also benefit from the historical financial and operational support provided to Castle Key as part of the Allstate organization. Castle Key is capitalized separately and not reinsured by Allstate, but it is AM Best’s expectation that Allstate would provide sufficient support if necessary to maintain Castle Key’s risk-adjusted capital at a level commensurate with its rating level in the event of frequent or severe hurricane activity.

The FSRs have been upgraded to B+ (Good) from B- (Fair) and the Long-Term ICRs to “bbb-” from “bb-” with a stable outlook for the following members of the Castle Key Group:

• Castle Key Insurance Company
• Castle Key Indemnity Company
• Encompass Floridian Insurance Company
• Encompass Floridian Indemnity Company

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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Raymond Thomson, CPCU, ARe, ARM

Director

+1 908 439 2200, ext. 5621

raymond.thomson@ambest.com



Greg Williams

Senior Director

+1 908 439 2200, ext. 5815

greg.williams@ambest.com



Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com



Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: AM Best