Best’s News & Research Service - April 25, 2013 02:26 PM (EDT)
A.M. Best Revises Outlook to Negative for Peachtree Casualty Insurance Company
OLDWICK, N.J. //BestWire// - A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of B (Fair) and the issuer credit rating of “bb” of Peachtree Casualty Insurance Company (Peachtree) (Longwood, FL).
The revised outlook reflects Peachtree’s unprofitable operating performance in recent years, as a result of the loss trends in the personal injury protection and bodily injury coverages’ that are part of the non-standard automobile lines of business it writes exclusively in Florida. Contributing to the underwriting losses was the strengthening of reserve levels in prior accident years following a comprehensive review of all claim files. It is anticipated that future reserve development trends will improve as a result of current management’s more conservative reserving practices.
The ratings reflect the elevated financial leverage at PGIA Holdings LLC, Peachtree’s ultimate parent. The negative rating factors are partially offset by the aggressive actions being taken by the current management team to improve profitability through the implementation of underwriting and operational strategies as well as more refined pricing segmentation.
Negative rating actions could result if the company’s operating performance were to continue to deteriorate or there was an unexpected material decline in risk-adjusted capitalization.
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.