Best’s News & Research Service - February 04, 2020 09:31 AM (EST)
AM Best Upgrades Credit Ratings of Broome Co-operative Insurance Company
- February 04, 2020 09:31 AM (EST)
Oldwick //BestWire// - AM Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to “a-” from “bbb+” of Broome Co-operative Insurance Company (Broome) (Vestal, NY). The outlooks of these Credit Ratings (ratings) have been revised to stable from positive.
The ratings reflect Broome’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
The rating upgrades reflect the company’s improved operating performance as a result of several key underwriting initiatives, demonstrated by four consecutive years of underwriting income and the below break-even combined ratio through 2019. Underwriting results have been impacted historically by severe and frequent winter events in New York. However, major technological advances, a focus on cost reduction and a re-underwritten book of business collectively have aided underwriting performance. As a result, a pattern of stability is more established, and the underwriting and operating ratios compare favorably with the personal property composite averages.
Broome’s balance sheet strength is supported by its risk-adjusted capitalization being at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), reflective of low underwriting leverage, a high-quality investment portfolio and stable loss reserving trends. The balance sheet strength also is supported by strong liquidity measures and consistent surplus growth. Offsetting rating factors include limited financial flexibility and limited scale of operations.
AM Best views the company’s business profile as limited based on writing predominantly property business and its geographical concentration in New York, which exposes results to weather-related events, as well as changes in the regulatory, judicial and economic environments. However, Broome adheres to an appropriate risk management program that identifies major risks to the organization while correlating mitigation strategies to offset those risks. In addition, the company maintains a comprehensive reinsurance program, including catastrophe coverage, which helps to shield surplus and mitigate tail risk from weather events.
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 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.
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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.