Best’s News & Research Service - July 19, 2023 12:53 PM (EDT)
AM Best Revises Outlooks to Stable for Members of GeoVera Insurance Group
- July 19, 2023 12:53 PM (EDT)
Oldwick //BestWire// - AM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) of the members of GeoVera Insurance Group (GeoVera) (headquartered in Fairfield, CA), which operate under an intercompany reinsurance agreement. (See below for a listing of the companies.)
The Credit Ratings (ratings) reflect GeoVera’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The revised outlooks to stable from negative reflect AM Best’s expectation that GeoVera’s operating performance has improved to a sustainable level after having implemented a successful portfolio transformation over the previous two years. GeoVera has actively reduced its exposures in its Southeastern residential wind business, which prior to the portfolio transformation, were the primary source of the increased catastrophe (CAT) losses that led to the deterioration in the group’s operating results. The group has refocused toward growing its higher margin residential earthquake business in California, Oregon and Washington. Additionally, the group has expanded into commercial property and commercial earthquake lines through its newly formed partnerships with two leading managing general underwriters: AmRisc Group and Arrowhead General Insurance Agency, Inc.
GeoVera’s very strong balance sheet strength is well-supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as satisfactory capital quality and financial flexibility. Furthermore, the group’s operating performance in 2022 and 2021 has generated healthy surplus growth, benefiting from a return to strong underwriting results in those years.
As a direct writer for earthquake risks, GeoVera faces the potential of high loss severity impacting its business; however, this is mitigated through its comprehensive reinsurance program. The group augmented its traditional reinsurance program with sponsorship of its first 144A CAT bond with Veraison Re Ltd in December 2022. The CAT bond offers $150 million in reinsurance protection to GeoVera over a three-year term, maturing in March 2026.
The FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) have been affirmed, with outlooks revised to stable from negative for the following members of GeoVera Insurance Group:
- Coastal Select Insurance Company
- GeoVera Insurance Company
- GeoVera Reinsurance, Ltd.
- GeoVera Specialty Insurance Company
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.