AM Best Information Services

JUNE 03, 2021 02:01 PM (EDT)

AM Best Revises Outlooks to Negative for Southern Vanguard Insurance Company

 Angelo Lozano
Senior Financial Analyst
+1 908 439 2200, ext. 5169

Joseph Burtone
+1 908 439 2200, ext. 5125
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644


OLDWICK - JUNE 03, 2021 02:01 PM (EDT)
AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Southern Vanguard Insurance Company (SVIC) (Houston, TX).

The Credit Ratings (ratings) reflect SVIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.

The negative outlooks reflect the recent increase in the holding company’s (InsVest Corp) unsecured debt position through a newly issued debt facility. The debt was utilized to buy out minority shareholders. Although management has a good history of keeping borrowing costs low, paying down debts quickly with strong profits from the managing general agency and maintaining moderate leverage measures, the most recent debt balance (as of first quarter of 2021) is considered elevated per AM Best Methodology guidelines. In addition, while SVIC has generated positive net income in each of the past five years, potential plans to grow writings in 2021 in a new operating territory (Florida) that is catastrophe prone will add execution risk to its current business plan and additional new risks onto its books of business. However, AM Best expects SVIC’s growth to be conservative, and the company plans on implementing a significant quota share reinsurance program on a majority of this business. Negative rating action may result if growth plans at SVIC result in adverse performance to the book of business, or if leverage at the holding company remains elevated or if management does not meet it pay-down schedule.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.

AMB# Company Name
012223 Southern Vanguard Insurance Company