Best’s News & Research Service - April 28, 2015 02:36 PM (EDT)
A.M. Best Revises Outlook to Positive for Spartan Insurance Company
- April 28, 2015 02:36 PM (EDT)
Oldwick //BestWire// - A.M. Best has revised the outlook to positive from stable and affirmed the financial strength rating of B+ (Good) and the issuer credit rating of "bbb-" of Spartan Insurance Company (Spartan) (Pearland, TX).
The revised outlook reflects the continuation of Spartan's favorable operating performance, low liabilities and surplus growth while risk-adjusted capitalization remains adequate and supportive of the ratings. This is due primarily to a recent shift in Spartan's business profile to a direct writer of non-owner private passenger auto liability business, which has resulted in a third consecutive underwriting profit and a below break-even combined ratio through 2014. Subsequently, the company's five-year combined ratio and pre-tax operating returns compare favorably to the private passenger non-standard automobile composite. In addition, Spartan maintains a conservative investment portfolio and favorable underwriting leverage measures.
These positive rating factors are partially offset by Spartan's elevated expense position and geographic concentration of risk. As a single state writer with limited product offerings, Spartan's results are exposed to judicial, economic and regulatory changes. Any material changes could potentially have a negative impact on the company's overall results.
Positive rating action in future rating cycles is contingent upon continued favorable underwriting and earnings trends while maintaining adequate overall risk-adjusted capitalization. However, negative rating action could occur if there is a material change in operating results, a decline in overall risk-adjusted capitalization or a change in business profile which disrupts the company's current business plan.
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:
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best's Ratings & Criteria Center.
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