Best’s News & Research Service - June 09, 2022 11:29 AM (EDT)
AM Best Upgrades Credit Ratings of Anchor General Insurance Company and Pacific Star Insurance Company
- June 09, 2022 11:29 AM (EDT)
Oldwick //BestWire// - AM Best has upgraded the Financial Strength Rating to B+ (Good) from B (Fair) and the Long-Term Issuer Credit Ratings to “bbb-” (Good) from “bb+” (Fair) of Anchor General Insurance Company (Anchor General) (San Diego, CA) and Pacific Star Insurance Company (Pacific Star) (Madison, WI), which is a subsidiary of Anchor General. The outlook of these Credit Ratings (ratings) has been revised to stable from positive.
The ratings of Anchor General reflect its balance sheet strength, which AM Best assesses as adequate, as well as adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). The ratings of Pacific Star reflect its balance sheet strength, which AM Best assesses as very strong, as well as adequate operating performance, limited business profile, appropriate ERM, and rating drag due to its direct ownership by Anchor General.
The revision of Anchor General’s ratings is based on its increased balance sheet strength in recent years, primarily driven by improved policyholders’ surplus growth, stabilized loss reserving trends and reduced underwriting leverage measures over a five-year period. However, Anchor General’s net premium written is projected to increase significantly in 2022 due to a change in its quota share retention to 55% versus 15% in prior years. Management’s decision is to retain more of the profitable business, which presents the opportunity to take rate increases on the new renewal book of business and the focus continues to be on core historically profitable producers. The revision of Pacific Star’s ratings is based on reduced rating drag from its parent, Anchor General.
The management of Anchor General and Pacific Star has implemented numerous corrective initiatives and strategies in earlier part of the past five-year period, which included significant rate increases, agency management and risk mitigation initiatives. As a result, the impact of these changes has materially improved Anchor General and Pacific Star’s underwriting and operating results, surplus position, along with the companies’ risk-adjusted capitalization. These positive rating factors are partially offset by Anchor General and Pacific Star’s limited business profiles, primarily due to geographic and product concentration as predominantly California private passenger non-standard auto writers, which exposes both companies to market, regulatory, legislative and judicial risks.
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.