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FOR IMMEDIATE RELEASE
OLDWICK - MARCH 08, 2016 11:47 AM (EST)
A.M. Best has removed from under review with developing implications and upgraded the financial strength rating to A (Excellent) from B (Fair) and the issuer credit rating to “a” from “bb” of ARI Insurance Company (ARI) (Newtown, PA). The outlook assigned to both ratings is stable.
The rating actions follow the acquisition of ARI by AmTrust Financial Services, Inc. (AmTrust) [NASDAQ:AFSI] and the approval of a 50% quota share reinsurance agreement between ARI and AmTrust International Insurance, Ltd., which includes coverage for ARI’s net reinsurance liabilities. They also reflect capital contributions to ARI during the first quarter of 2016. These actions have driven an improvement in ARI’s balance sheet strength, including its risk-adjusted capital level.
Partially offsetting these positive factors are ARI’s poor underwriting and operating performance in recent years, driven by substantial levels of adverse development of prior years’ loss reserves in 2014 and 2015 and elevated underwriting expenses.
Positive rating action is not expected in the near term, although such action could occur should there be a sustained improvement of performance relative to peers. Negative rating actions could result if underwriting or operating performance deteriorates, particularly if such deterioration drives a substantial decline in risk-adjusted capitalization.
This press release relates to rating(s) 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.
A.M. Best is the world’s oldest and most authoritative insurance rating and information source.