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MAY 05, 2022 04:04 PM (EDT)

AM Best Downgrades Credit Rating of Aegis Security Insurance Company; Maintains Under Review With Negative Implications Status


CONTACTS:
 Joseph Burtone
Director
+1 908 439 2200, ext. 5125
joseph.burtone@ambest.com

Richard Attanasio
Senior Director
+1 908 439 2200, ext. 5432
richard.attanasio@ambest.com
Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jeff Mango
Managing Director, Strategy & Communications
+1 908 439 2200, ext. 5204
jeffrey.mango@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - MAY 05, 2022 04:04 PM (EDT)
AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb+” (Good) from “a-” (Excellent) of Aegis Security Insurance Company (Aegis) (Harrisburg, PA). Concurrently, AM Best has maintained the under review with negative implications status on these Credit Ratings (ratings).

The ratings reflect Aegis’ balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.

The rating downgrades reflect a revision in the business profile assessment to limited from neutral given the company’s ongoing fluctuations in distribution agreements, product offerings, somewhat inconsistent business plans and geographic concentration of risk.

The maintaining of the under review with negative implications status is mainly due to the company’s decline in risk-adjusted capitalization at year-end 2021. The reduction was driven by a considerable increase in underwriting leverage due to the assumption of a property book of business, coupled with a surplus decline of nearly 7% due to weather related losses and corresponding net underwriting loss. The maintaining of the under review with negative implications status also recognizes the efforts to improve risk-adjusted capitalization with the sale of its wholly owned subsidiary, American Sentinel Insurance Company. A definitive agreement has been signed with a projected close date of late June or July 2022. The sale is anticipated to result in a net gain and subsequent improvement in risk-adjusted capitalization. In addition, management has indicated a likely reduction in premium writings given various re-underwriting initiatives and continued decline in one of its current distribution channels. In the absence of capital improvement, the ratings likely will be downgraded further. The ratings will remain under review pending the close of the subsidiary sale and AM Best’s review of the full impact of these transactions.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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.


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AMB# Company Name
003716 Aegis Security Insurance Company