Best’s News & Research Service - December 09, 2020 01:24 PM (EST)
AM Best Downgrades Credit Ratings of Echelon Property & Casualty Insurance Company
- December 09, 2020 01:24 PM (EST)
Oldwick //BestWire// - AM Best has downgraded the Financial Strength Rating to C+ (Marginal) from B- (Fair) and the Long-Term Issuer Credit Rating to “b-” from “bb-” of Echelon Property & Casualty Insurance Company (Echelon) (Chicago, IL). The outlook of these Credit Ratings (ratings) is negative.
The ratings of Echelon, reflect its balance sheet strength, which AM Best categorizes as very weak, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management .
The downgrade of the ratings follows a deterioration in balance sheet strength in the third quarter of 2020 and a change in AM Best’s assessment from weak to very weak. While the company received a capital infusion from its parent – Guardian Insurance Group – in the second quarter of this year, which favorably impacted overall capitalization, operating losses and an increase in non-admitted assets in the third quarter of 2020 eroded policyholder surplus. Premium volume declined as a result of the COVID-19 pandemic, caused by a decrease in demand in the commercial auto program, Echelon’s primary line of business. Subsequently, the company has stopped writing commercial auto in Illinois in an effort to improve profitability. While the parent continues to support the company with the aforementioned capital contribution and on-going operational support, AM Best expects Echelon’s results to remain volatile, which will continue to place pressure on balance sheet strength.
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.