Best’s News & Research Service - April 14, 2022 01:55 PM (EDT)
AM Best Places the Credit Ratings of Members of Vault Holdings Group Under Review with Negative Implications
- April 14, 2022 01:55 PM (EDT)
Oldwick //BestWire// - AM Best placed under review with negative implications the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Vault E&S Insurance Company (Little Rock, AR) and Vault Reciprocal Exchange (St. Petersburg, FL), collectively referred to as Vault Holdings Group (Vault).
The Credit Ratings (ratings) of Vault being placed under review with negative implications reflect a material deterioration in its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), combined with significant volatility in operating performance, which led to substantial surplus erosion from mid-year highs that followed a $100 million capital contribution. Volatility in 2021 was influenced by two catastrophe events (Winter Storm Uri and Hurricane Ida) that reached full retention levels, as well as one-time costs related to the organization’s separation from Allied World Assurance Company Holdings, Ltd., reserve strengthening and a larger than expected impact from large losses. Collectively, year-end 2021 surplus declined to $156.8 million from $190.6 million at the end of the first quarter of 2021. As a result of capital deterioration, coupled with continued exposure growth as Vault expands its footprint, its risk-adjusted capitalization as measured by BCAR declined to the strong level from strongest level at the prior rating review. To address the issue, management has communicated near-term capital action plans intended to return risk-adjusted capitalization to the strongest level and thus improve overall balance sheet strength. The ratings will remain under review until management executes the intended actions and AM Best evaluates the impact on the overall organization.
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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.