Best’s News & Research Service - October 11, 2013 02:49 PM (EDT)
A.M. Best Revises Rating Outlook of Caring Communities, a Reciprocal Risk Retention Group & Caring Communities Insurance Company
OLDWICK, N.J. //BestWire// - A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Caring Communities, a Reciprocal Risk Retention Group (CCrRRG) (District of Columbia) and Caring Communities Insurance Company (CCIC) (Cayman Islands).
The rating actions reflect CCrRRG’s and CCIC’s excellent risk-adjusted capitalization, good geographic spread of risk and consistently profitable operating results. Also, significant cash flows from underwriting and operations coupled with a prudently conservative investment portfolio have a positive influence on the ratings. Selective underwriting, tailored loss control and engineering services designed for facilities caring for seniors, and a claims approach focusing on the liability risks within senior-care housing and community settings have resulted in 97% policyholder retention since inception. Furthermore, continuing and more in-depth implementation of strong risk management measures has contributed to declining loss frequency, loss severity and overall lower average loss costs for both companies.
Partially offsetting these positive rating factors is CCrRRG and CCIC's reinsurance program that historically results in a moderately high reserve leverage statistic associated with long-tail casualty lines of business.
Because CCrRRG and CCIC's primary mission is to provide to their owner/policyholders stable coverage into the future, they have generated a net profit for all years of their existence. They also have recorded combined ratios that outperform their peers by a significant margin. The investment portfolio is invested in a diverse mix of assets that results in a conservative portfolio to consistently yield a reasonable return.
Rating factors that could lead to CCrRRG and CCIC’s ratings being upgraded include a long-term consistently strong operating performance, maintaining strong risk-adjusted capital levels and executing its business plan. A.M. Best could downgrade CCrRRG and CCIC's ratings and/or revise the outlook if the Best's Capital Adequacy Ratio (BCAR) score declines, operating performance and risk profile deteriorate, insured losses deplete capital, or significant changes and turnover occur in the management team or risk management controls and tolerances.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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.