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FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 07, 2018 09:01 AM (EST)
A.M. Best has assigned a Financial Strength Rating (FSR) of A- (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” to Palomar Specialty Reinsurance Company Bermuda Ltd. (Palomar Re) (Bermuda). The outlook assigned to these Credit Ratings (ratings) is stable. Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and Long-Term ICR of “a-” of Palomar Specialty Insurance Company (PSIC) (headquartered La Jolla, CA). The outlook of these ratings remains stable. Both companies are members of GC Palomar Holdings (Palomar).
The ratings reflect Palomar’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
Palomar’s capital assessment reflects moderate underwriting leverage, a sound liquidity position and consistently favorable loss reserve development that is partially offset by significant reinsurance dependence. Adequate operating performance reflects the geographic concentration in catastrophe prone areas, which results in some potential for volatility. This was evident in 2017, when Palomar’s underwriting results were adversely impacted by net losses from Hurricane Harvey and Texas wind and hailstorms. However, despite these losses, Palomar managed to generate favorable operating earnings for the year.
Palomar’s limited business profile reflects a concentration of business, given its exposure to catastrophes, primarily a severe earthquake event. Gross catastrophe leverage for a 1 in 250-year earthquake is elevated, as depicted in a probable maximum loss analysis. Palomar also maintains significant dependence on reinsurance to reduce its gross earthquake exposure. However, given management’s extensive experience in the residential and commercial earthquake markets and comprehensive reinsurance program, Palomar has reduced its net catastrophe leverage to a manageable level with risk management capabilities in line with its profile.
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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