AM Best has downgraded the Financial Strength Rating to C++ (Marginal) from B++ (Good) and the Long-Term Issuer Credit Rating to b from bbb+ of INTEGRAND Assurance Company (INTEGRAND) (San Juan, Puerto Rico). Concurrently, AM Best has maintained the under review with negative implications status for these Credit Ratings (ratings).
The rating downgrades reflect INTEGRANDs balance sheet strength, which AM Best categorizes as weak, as well as its marginal operating performance, very limited business profile and marginal enterprise risk management (ERM).
AM Best views the companys risk-adjusted capitalization as weak based on the continued exposure to disputed reinsurance recoverables, with heightened uncertainty regarding their ultimate resolution. Additionally, these rating actions follows a recent regulatory announcement from the Insurance Commissioner of Puerto Rico, which limits the company from actively writing new business in Puerto Rico, suspending any commission increases and several other activities over the near term
The ratings previously were downgraded and placed under review with negative implications on Nov. 29, 2018, in response to the companys third-quarter statutory statement that reflected a sizable decline in policyholder surplus due to adverse development on losses related to hurricanes Maria and Irma of approximately $15 million. At that time, AM Best revised the assessment of INTEGRANDs ERM to marginal. The assessment downgrade was driven by the size of the additional catastrophe losses relative to amounts previously disclosed to AM Best, which created uncertainty regarding the companys ERM program.
As part of these latest rating actions, AM Best has revised its assessment of INTEGRANDs business profile downward to very limited from limited, largely due to the regulatory restrictions under which the company must now operate. Furthermore, INTEGRANDs operating performance assessment also was revised downward to marginal from adequate, driven by weak operating performance over the past few years, as the companys operating return measures trails its peer and industry composites by a sizable margin.
These ratings will remain under review pending AM Bests analysis of the companys business plans.
This press release relates to Credit Ratings that have been published on AM Bests 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 Bests Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Bests Credit Ratings. For information on the proper media use of Bests Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Bests Credit Ratings and AM Best Rating Action Press Releases.
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