Press Release - NOVEMBER 29, 2018
A.M. Best Downgrades Credit Ratings of Aegis Security Ins Co.; Places Credit Ratings Under Review With Negative Implications
FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 29, 2018
The rating downgrades reflect Aegis’ balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM). The rating actions reflect the company’s significant losses following the recent California wildfires.
The rating actions also reflect a lowered assessment of the company’s ERM and stem from the company’s lack of underwriting and exposure aggregation mitigation in high risk fire areas. Additionally, Aegis’ net losses exceeded its anticipated losses from an event of this magnitude, as well as the company’s available reinsurance protection. While the company has the ability to obtain financial support in distressed times, the overall risk mitigation strategies raise concerns regarding the company’s ERM processes.
The under review status reflects the residual uncertainty regarding the company’s balance sheet strength following these events. The magnitude and scale of the events may pressure risk-adjusted capitalization and the claims infrastructure. However, the company’s ownership group has indicated that capital contributions will be made to replenish any lost capital, prior to the close of the year. These capital contributions require regulatory approval, and thus the balance sheet will remain stressed until that takes place. As a result, these ratings were placed under review with negative implications, pending a review of the company’s balance sheet and operational changes given these catastrophe events.
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 A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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