Press Release - MAY 28, 2019

AM Best Assigns Credit Ratings to Centerline Property and Casualty Insurance Company


CONTACTS:
 Dan Teclaw
Senior Financial Analyst
+1 908 439 2200, ext. 5394
dan.teclaw@ambest.com

Susan Molineux
Associate Director
+1 908 439 2200, ext. 5829
susan.molineux@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

FOR IMMEDIATE RELEASE

OLDWICK - MAY 28, 2019
AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of “bbb+” to Centerline Property and Casualty Insurance Company (Centerline) (Knoxville, TN). The outlook assigned to these Credit Ratings (ratings) is stable.

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

Centerline was founded in 1970 as a licensed commercial insurer, and primarily and successfully covered affiliated insurance risks in-house for its parent, Watkins Associated Industries, Inc. (WAI) until 2014, when it registered as a Tennessee-domiciled pure captive for WAI. It has expanded its scope to that of a fully licensed commercial insurer domiciled in Tennessee as of Jan. 1, 2019. WAI is an 85-year-old Florida-incorporated, family-owned conglomerate engaged in five major activities: trucking, food processing, building material manufacturing, real estate development and operations, and insurance services throughout the United States. WAI ownership and Centerline’s executive management are interlocked, developing attributes over time of a methodical and risk-averse culture in synergistic, long-term ventures.

In its risk management role for WAI, Centerline’s underwriting performance has been very good as a small, niche commercial lines insurer providing insurance products concentrated in the commercial transportation sector. Products written by Centerline include affiliated commercial auto liability/physical damage, general liability and cargo. The company has two primary lines of business: affiliated company business for WAI; and non-affiliated small fleet trucking coverage fronted through State National Insurance Company, Inc. It is currently developing a new third party cargo product with low insurance risk and a short tail, the largest risk of which is execution with innovative distribution plans. AM Best will monitor management’s execution of its business plans for take-up and profitability, especially as it relates to the new third party cargo product.

Positive rating action could occur in the near to medium term if underwriting and operating results continue to outperform the company’s peers and achieve management’s projections, as it transitions from a captive to a fully licensed commercial insurance writer or if it maintains its strongest Best’s Capital Adequacy Ratio (BCAR) scores while materially growing its surplus over time through underwriting and operating earnings. Negative rating action could occur if the company’s risk-adjusted capitalization, as measured by BCAR, or surplus size declines materially; if the company’s underwriting or operating performance weakens and negatively impacts surplus or risk-based capitalization; or if underwriting and operating results underperform materially or differ from management forecasts.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

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.


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