AM Best

A.M. Best Revises Outlook to Negative for Greenpath Insurance Company


Kenneth Tappen
Senior Financial Analyst
(908) 439-2200, ext. 5248

Rick Decker
Assistant Vice President
(908) 439-2200, ext. 5423
Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


OLDWICK - OCTOBER 07, 2015 08:37 AM (EDT)
A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of B+ (Good) and the issuer credit rating of “bbb-” of Greenpath Insurance Company (Greenpath) (Rancho Cordova, CA).

The negative outlook is driven by Greenpath’s recently increased operating losses and decline in policyholders’ surplus, which fell short of management’s financial projections. Additionally, Greenpath’s near-term projected earnings, policyholders’ surplus and risk-adjusted capitalization indicate further weakening that falls short of management’s original five-year plan. The shortfall is reflective of Greenpath’s termination of an 80% quota share with Benchmark Insurance Company on its “Navigator” product. The resulting additional premium recently brought onto Greenpath’s books has begun to adversely impact its underwriting results, operating earnings and risk-adjusted capitalization.

The ratings affirmations reflect Greenpath’s adequate risk-adjusted capitalization and senior management’s operating experience and in-depth knowledge of California’s private passenger non-standard automobile market. Additionally, the company is technologically advanced and utilizes predictive analytics as a road map for decision making with a heavy emphasis on managing loss frequency. Furthermore, data warehouse design provides for multivariate data review, analysis and pricing of risks.

Partially offsetting these positive ratings factors is Greenpath’s execution risk associated with growing a private passenger non-standard automobile book of business, a segment in which smaller insurance writers have experienced a material deterioration in operating results and policyholders’ surplus in recent years. The general deterioration in the non-standard automobile line of business has been partially driven by economic conditions, significant price competition and adverse selection from large personal automobile writers with greater scale and pricing granularity.

Negative ratings actions could occur if the Greenpath’s risk-adjusted capitalization and/or earnings fall materially below management’s financial projections.

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 visit A.M. Best’s Ratings & Criteria Center.

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