Best’s News & Research Service - February 02, 2024 10:50 AM (EST)
AM Best Affirms Credit Ratings of Capital Indemnity Corporation and Its Subsidiaries
- February 02, 2024 10:50 AM (EST)
//BestWire// - AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a+” (Excellent) of Capitol Indemnity Corporation and its two subsidiaries, Capital Specialty Insurance Corporation and Platte River Insurance Company which are collectively referred to as CapSpecialty Insurance Group (CapSpecialty). CapSpecialty is headquartered in Middleton, WI. The outlook of these Credit Ratings (ratings) is stable.
The ratings of CapSpecialty reflect its balance sheet strength, which AM Best assesses as strongest, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management, as well as implicit and explicit support provided by Berkshire Hathaway Inc.
CapSpecialty’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), has been consistently maintained at the strongest level and now benefits from significant reinsurance agreements with its affiliated National Indemnity Company, which reduced CapSpecialty’s gross, net premium and reserve leverages. CapSpecialty’s investments are managed by Berkshire Hathaway Inc., and are expected to show, over time, an increase in allocations to common stocks with high intrinsic value, in accordance with Berkshire Hathaway Inc.’s investment philosophy.
AM Best assesses CapSpecialty’s operating performance as marginal, which is reflective largely of its underwriting metrics that have lagged the surplus lines composite on a five and 10 year average basis. While the group’s loss ratio compares favorably to peers, its elevated expense structure has pressured key profitability metrics. Going forward, AM Best expects that ongoing strategic initiatives focused on improving operational efficiencies will continue to drive improvement in the group’s expense structure, enabling it to improve on its overall performance. CapSpecialty’s recent decision to exit its property business could also reduce volatility in its underwriting results.
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.