Best’s News & Research Service - June 10, 2020 04:01 PM (EDT)
AM Best Affirms Credit Ratings of Kingstone Insurance Company and Kingstone Companies Inc.
- June 10, 2020 04:01 PM (EDT)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of Kingstone Insurance Company (KICO) (Kingston, NY). Concurrently, AM Best has affirmed the Long-Term ICR of “bbb-” of Kingstone Companies Inc. (KINS) (Delaware) [NASDAQ: KINS], the insurance holding company of KICO.
AM Best also has affirmed the Long-Term Issue Credit Rating (Long-Term IR) of “bbb-” on KINS’ $30.0 million, 5.50% senior unsecured notes due 2022; and the indicative Long-Term IRs of “bbb-” for senior unsecured notes and “bb+” for subordinated notes of the shelf registration of KINS. The outlook of these Credit Ratings (ratings) remains negative.
The rating affirmations of KICO reflect its balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management. Despite modest deterioration recently, KICO’s risk-adjusted capitalization remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Additionally, KICO’s five-year and 10-year operating performance measures remain generally favorable relative to the personal property industry composite average.
The negative outlooks reflect deterioration in underwriting performance over the past two years and corresponding declines in policyholders’ surplus. These trends were influenced by execution issues from significant growth, weather-related losses and reserve strengthening in commercial lines.
In response, KICO has implemented a number of strategic initiatives including senior leadership changes, slowed expansion efforts, reorganized operations and withdrawal from commercial lines. However, the ultimate effectiveness of these efforts is uncertain and drives the negative outlook.
Lastly, the ratings for the holding company, KINS, reflect its moderate financial leverage and historically favorable interest coverage, which fall within the guidelines for the ratings.
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 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 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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.