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Best’s News & Research Service - September 29, 2023 02:57 PM (EDT)

AM Best Downgrades Credit Ratings of Dover Bay Specialty Insurance Company

  • September 29, 2023 02:57 PM (EDT)
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Oldwick //BestWire// - AM Best has downgraded the Financial Strength Rating (FSR) to B++ (Good) from A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” (Good) from “a” (Excellent) of Dover Bay Specialty Insurance Company (Dover Bay) (Bloomington, IL). The outlook of the FSR has been revised to stable from negative while the outlook of the Long-Term ICR is negative.

The Credit Ratings (ratings) of Dover Bay reflect its balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate ERM. The ratings also reflect lift, as defined within Best’s Credit Rating Methodology, from its parent, State Farm Mutual Automobile Insurance Company.

The rating downgrades reflect Dover Bay’s persistent underwriting losses since 2021 – at which time AM Best revised the outlooks to negative – as a result of numerous weather-related losses affecting the states in which most of its underwriting exposures are based, most notably Louisiana, Texas and other Gulf Coast and South Atlantic states. Although Dover Bay has reduced its net risk retention through the purchase of external reinsurance, the cost of such protection has increased significantly following adverse industry-wide catastrophe loss experience. The repeated loss events have resulted in net underwriting losses, contributing to deterioration in capital and surplus. Dover Bay underwrites primarily homeowners insurance on an excess and surplus lines basis, primarily in southern coastal territories.

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.

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