Best’s News & Research Service - September 01, 2016 02:50 PM (EDT)
A.M. Best Affirms Ratings of ProSight Global Holdings Limited and Its Subsidiaries
- September 01, 2016 02:50 PM (EDT)
Oldwick //BestWire// - A.M. Best has affirmed the issuer credit rating (ICR) of “bbb” of ProSight Global Holdings Limited (ProSight Global Holdings). In addition, A.M. Best has affirmed the financial strength ratings of A (Excellent) and the ICRs of “a” of New York Marine and General Insurance Company and its wholly owned subsidiaries, Gotham Insurance Company and Southwest Marine & General Insurance Company (collectively referred to as ProSight Specialty Group).
Concurrently, A.M Best has affirmed the ICR of “bbb” and the issue ratings of “bbb” on the $140 million 7.5% senior unsecured notes, due November 2020 and the $25 million 6.5% senior unsecured notes, due November 2020 of ProSight Global, Inc. (ProSight Global). These notes are guaranteed by ProSight Global Holdings. The outlook for each of the ratings is stable. All companies are headquartered in Morristown, NJ.
The ratings reflect ProSight Specialty Group’s supportive level of risk-adjusted capitalization, generally favorable operating earnings and strong market niche position in its core specialty lines of business. The ratings also recognize the strength of the senior management team, and the progress the team has made in repositioning the business and improving results since the group’s acquisition in 2010.
Offsetting these positive rating factors are ProSight Specialty Group’s elevated underwriting expense ratio, limited organic surplus growth over the most recent five-year period, and the risks associated with the growth and maturation of new business. In addition, ProSight Specialty Group’s 2015 pure loss ratio increased due to adverse loss development, most notably in the commercial auto liability business segment. To protect against future losses in this segment, numerous corrective actions have been taken by management, some of which include various loss control measures including exiting unprofitable lines, and tightened underwriting guidelines and restrictions. Further, ProSight Specialty Group’s terrorism exposure is high on a gross basis; however, management has reduced the exposure to a manageable level through the utilization of reinsurance and the federal terrorism backstop, Terrorism Risk Insurance Program Reauthorization Act (TRIPRA).
ProSight Global Holdings’ debt-to-capital as of Mar. 31, 2016, falls within the guidelines for the current rating level. Additionally, ProSight Global Holdings maintains adequate resources to cover the required interest payments.
The stable outlooks take into account A.M. Best’s expectation that ProSight Specialty Group will maintain its adequate level of risk-adjusted capitalization and generate operating profits prospectively.
Negative rating actions may occur if ProSight Specialty Group has a decline in underwriting profitability or a considerable deterioration in its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). Positive rating movement may occur after several years of demonstrated earnings sustainability in line with A.M. Best’s expectations.
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 see A.M. Best’s Recent Rating Activity web page.
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