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FOR IMMEDIATE RELEASE
OLDWICK - JULY 02, 2019 10:36 AM (EDT)
AM Best has revised the outlooks to stable from positive and affirmed the Financial Strength Rating of B+ (Good) and the Long-Term Issuer Credit Rating of “bbb-” of Capacity Insurance Company (Capacity) (Sunrise, FL).
The Credit Ratings (ratings) reflect Capacity’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 revised outlooks to stable from positive are based on Capacity’s deterioration in underwriting results and operating performance in recent years, which culminated in a moderate decline in policyholders’ surplus in 2018. The deterioration was driven by net incurred losses of $450,000 in 2017 from Hurricane Irma claims and net incurred losses of $500,000 in 2018 from Hurricane Michael claims. The deterioration also was driven by a continuation of materially adverse loss reserve development on Capacity’s liability portion of commercial multiple peril and general liability lines of business.
In response, Capacity has recently implemented a 5.0% liability rate increase and has begun writing business in Texas as well as through another writer via a fronting arrangement in North Carolina, South Carolina, Georgia and Alabama to improve geographic diversification and stimulate premium growth.
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.
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