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FOR IMMEDIATE RELEASE
OLDWICK - JUNE 05, 2014 04:04 PM (EDT)
A.M. Best has assigned a financial strength rating of B (Fair) and an issuer credit rating of "bb" to Safepoint Insurance Company (Safepoint) (12640 Telecom Drive, Tampa, FL). The outlook assigned to both ratings is stable.
The ratings for Safepoint reflect its adequate level of capitalization, which supports the underwriting, credit and investment risks of the company. The company's business plans consist entirely of writing Florida property business that meets specific risk characteristics. While strict risk selection criteria and underwriting guidelines are in place, the concentration of property business and corresponding dependence on reinsurance are significant risk factors. Although untested, sophisticated pricing is in place and is commensurate with the profile of each risk and its related reinsurance cost while conforming to regulatory guidelines. Safepoint's business is being developed as part of a Florida take-out strategy utilizing an extensive managing general agency network that has been operating in Florida for many years. Accordingly, the successful execution of Safepoint's business development plans is highly dependent on its strategic business partners. Additionally, the ratings reflect Safepoint's comprehensive reinsurance program, which is designed to mitigate the impact of not only severe hurricane activity, but also multiple catastrophic weather events on its surplus. Based on management's near-term financial plan, its 100- year after-tax probable maximum loss, utilizing the current catastrophe model, is at a moderate level relative to surplus and appropriate for the current rating level.
Positive rating actions could occur for Safepoint following several periods of profitable results and an increase in policyholders' surplus and corresponding risk-adjusted capitalization. Negative rating actions could result if the operational and financial plans anticipated by management do not materialize resulting in a decline in capitalization. In addition, a significant disruption in the Florida property insurance market emanating from either regulatory/judicial decisions or natural events also could result in negative rating actions.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.