Best’s News & Research Service - December 17, 2020 10:04 AM (EST)
AM Best Withdraws Credit Ratings of Governmental Interinsurance Exchange
- December 17, 2020 10:04 AM (EST)
Oldwick //BestWire// - AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of “bbb+” of Governmental Interinsurance Exchange (GIE) (Bloomington, IL). The outlook of the FSR is stable. Concurrently, AM Best has withdrawn these public Credit Ratings (ratings).
The ratings reflect GIE’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).
The revised Long-Term ICR outlook to negative from stable for GIE is based on the continued erosion of surplus, which has been driven by ongoing weak underwriting and operating results, with performance metrics falling significantly below the commercial casualty composite. Despite the surplus deterioration, GIE continues to maintain risk-adjusted capitalization at the strongest level, as measured by Best Capital Adequacy Ratio (BCAR). The very strong balance sheet assessment is further supported by modest underwriting leverage measures and generally favorably loss reserve development. Operating performance has experienced a significant downward trend, driven by a spike in loss activity and an elevated expense ratio mainly due to expenses arising from legal expense in defense of claims against policyholders. The limited business profile assessment reflects product and geographic concentration in its niche public entity market. AM Best views ERM as appropriate for the company’s size and scope of operations.
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.