Best’s News & Research Service - October 28, 2014 03:01 PM (EDT)
A.M. Best Assigns Ratings to American Shield Insurance Company
Oldwick //BestWire// - A.M. Best has assigned a financial strength rating of A (Excellent) and an issuer credit rating of "a+" to American Shield Insurance Company (American Shield) (Columbia, MO). The outlook assigned to both ratings is stable.
The ratings reflect the implementation of a 100% quota share agreement between American Shield and its parent, Shelter Mutual Insurance Company (Shelter Mutual). American Shield plans to sell property/casualty insurance products, underwritten through the parent, via independent agents located in Arizona. Products planned to be offered include private passenger auto, homeowners, as well as personal liability umbrella policies.
American Shield is expected to maintain strong risk-adjusted capitalization through its affiliation with Shelter Mutual. In an effort to ensure the new company is strong financially, Shelter Mutual contributed approximately $5 million.
Partially offsetting these positive rating factors are the company's anticipated small scale of operations and limited product and geographic diversification in the new states. However, American Shield's affiliation with Shelter Mutual, which maintains strong risk-adjusted capitalization and favorable operating performance, mitigates the anticipated risks of fluctuating operating performance and erosion of balance sheet strength for the company.
While A.M. Best believes the current rating is appropriately positioned, negative rating actions would ensue if there were a change in the relationship with the parent, overall results deteriorated or risk-adjusted capitalization declined materially.
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.
Key insurance criteria reports utilized:
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.