Best’s News & Research Service - November 22, 2019 01:08 PM (EST)
AM Best Affirms Credit Ratings of Vault Reciprocal Exchange
- November 22, 2019 01:08 PM (EST)
Oldwick //BestWire// - AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Vault Reciprocal Exchange (Vault) (St. Petersburg, FL). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect Vault’s balance sheet strength, which AM Best categorizes as strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM). Vault is sponsored by Allied World Assurance Company Holdings Ltd (Allied World), which is a member of Fairfax Financial Holdings Limited. Allied World provides substantial capital, strategic, operational and reinsurance support, which has been considered in the ratings.
Vault was created in 2017 to take advantage of market opportunities within the high net worth homeowners segment, specifically starting in Florida but has since expanded into several other states including South Carolina and New Jersey. The company’s balance sheet strength assessment is based on the strongest level of risk-adjusted capitalization, as measured by Best Capital Adequacy Ratio (BCAR), which is intended to support growth plans over the near term, partially offset by a capital structure that leverages surplus notes significantly. Operating performance captures execution risk whereby profit is linked to the generation of member surplus contributions that are tied to meeting gross written premium projections. The limited profile reflects the current geographic and product concentration within catastrophe-prone Florida, though Vault’s call for expansion into other states. AM Best considers ERM to be appropriate, reflective of sophisticated catastrophe modeling techniques, a prudent reinsurance program and the ability to draw from a well-established ERM program within Allied World. The stable outlooks are based on AM Best’s expectation that Vault’s operating results will generally fall in line with management’s projections, and balance sheet strength will remain strong and supportive of future growth supplemented with ongoing financial commitments from Allied World.
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 Understanding 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 provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.