Best’s News & Research Service - June 13, 2023 01:52 PM (EDT)
AM Best Revises Outlooks to Negative for Kentucky Growers Insurance Company
- June 13, 2023 01:52 PM (EDT)
Oldwick //BestWire// - AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Kentucky Growers Insurance Company (Kentucky Growers) (Lexington, KY).
The Credit Ratings (ratings) reflect Kentucky Growers’ balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The negative outlooks reflect AM Best’s concern over Kentucky Growers’ unfavorable operating performance in recent years, which was driven by a deterioration in underwriting results. This deterioration was attributable to an increased frequency and severity of weather-related loss events. Kentucky Growers also has a geographic concentration of risk, which leaves it susceptible to adverse weather conditions and has greatly contributed to the volatile operating performance in recent years.
The operating performance assessment benefits from Kentucky Growers’ historical profitability metrics that outperformed its industry composite on a five-year and 10-year average basis. Kentucky Growers’ balance sheet strength is supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and conservative underwriting and loss reserve leverage measures. While Kentucky Growers’ management continues to monitor market conditions and takes additional rate changes as needed, the ultimate effectiveness in reversing the negative trends in operating performance and returning to historical norms is uncertain. While AM Best expects Kentucky Growers to improve its underwriting profitability over the intermediate term, a prolonged continuation of adverse operating performance and elevated combined ratios could result in further negative rating actions.
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.