Best’s News & Research Service - April 24, 2019 08:47 AM (EDT)
AM Best Removes From Under Review With Negative Implications and Affirms Credit Ratings of Tri-State Consumer Insurance Company
- April 24, 2019 08:47 AM (EDT)
Oldwick //BestWire// - AM Best has removed from under review with negative implications and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Tri-State Consumer Insurance Company (Tri-State) (Jericho, NY). The outlook assigned to these Credit Ratings (ratings) is negative.
The ratings reflect Tri-State’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
AM Best placed Tri-State’s ratings under review with negative implications on Dec. 10, 2018, following the announcement of the stock purchase agreement to sell Tri-State to Standard Diversified Inc. Ultimately, the deal was terminated, and additional time was taken to evaluate Tri-State’s ongoing operations and balance sheet strength, prior to removing the ratings from under review.
This rating action recognizes a continuation of the negative outlooks assigned prior to the under review status. The negative outlooks had been assigned based on Tri-State’s deteriorating underwriting trends in 2016 and 2017. Since the assignment of the negative outlooks, the company has implemented corrective actions to improve its underwriting model, and although year-end 2018 was an unprofitable underwriting year, underwriting has improved. Additionally, Tri-State’s total operating earnings, as measured by pre-tax and total returns on revenue and equity, compare favorably with the private passenger standard auto and homeowners composite. In addition, the company’s five-year average combined and operating ratios outperform the composite. However, recent results (2016-2018) in underwriting performance are the main drivers of the negative outlooks. Removal of the negative outlooks in future cycles is contingent upon Tri-State continuing to demonstrate improvement in its underwriting results.
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 Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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