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FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 05, 2015 10:14 AM (EST)
A.M. Best has removed from under review with negative implications and affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit rating (ICR) of "bbb" of Stonetrust Commercial Insurance Company (Stonetrust) (Baton Rouge, LA). The outlook assigned to both ratings is stable.
The ratings of Stonetrust were placed under review with negative implications following the announcement that Dhandho Holdings, L.P. had reached an agreement to acquire Stonetrust Commercial Mutual Holding Company, the parent of Stonetrust. The transaction closed on Dec. 31, 2014.
The ratings of Stonetrust reflect its solid risk-adjusted capitalization following a $30 million capital contribution from its new parent, historically profitable operating results and management's underwriting experience within its niche workers' compensation space. These positive rating attributes are partially offset by the uncertainty generated by the recent ownership change, as well as the rapid growth in premium in 2011-2013 that was not matched by increased surplus, some variability in development of loss reserves for the 2010-2012 accident years, the risks associated with operating as a mono-line writer within a limited geographic spread that exposes operations to local regulatory and economic changes, and increased competition.
Negative rating actions could result if operating performance falls markedly short of A.M. Best's expectation or if risk-adjusted capitalization weakens significantly.
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.
Key insurance criteria reports utilized:
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.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.