MAY 17, 2012 12:00 AM (EDT)
A.M. Best Upgrades Ratings of Sublimity Insurance Company
Senior Financial Analyst
(908) 439-2200, ext. 5120
Greg T. Williams
Managing Senior Financial Analyst
(908) 439-2200, ext. 5815
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 17, 2012 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating (FSR) to A- (Excellent) from B++ (Good) and issuer credit rating (ICR) to a- from bbb+ of Sublimity Insurance Company (Sublimity) (Sublimity, OR). The outlook for both ratings has been revised to stable from positive.
Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of a-of United Heritage Life Insurance Company and the FSR of B++ (Good) and ICR of bbb of United Heritage Property & Casualty Company. Both companies are domiciled in Meridian, ID and are members of United Heritage Financial Group, Inc. (UHFG). The outlook for these ratings is stable.
The upgrades reflect Sublimitys excellent capitalization and consistently favorable underwriting performance, along with its long-standing local market presence as a personal lines writer in Oregon, Utah and Idaho. These positive rating factors are partially offset by the companys somewhat concentrated book of business compounded by its exposure to potential weather-related losses and a relatively high expense structure.
Sublimitys positive rating factors are derived from managements persistent efforts to improve underwriting results, which include re-underwriting efforts, rate increases and termination of unprofitable agents. Operating results have significantly improved in recent years as a result of these initiatives, coupled with generally milder weather conditions in most years. Sublimity also benefits from the explicit and implicit support it receives as a member of UHFG.
Negative rating factors include Sublimitys property book, which has experienced variable operating results stemming from its geographic concentration in Oregon, which may subject the company to weather-related loss exposure, potentially adverse legal and regulatory conditions, as well as competitive market pressures. Compounding this is Sublimitys somewhat elevated expense structure. All of these issues will be monitored carefully as the company continues a period of planned premium expansion.
While A.M. Best does not expect to downgrade/or place a negative outlook on the ratings of Sublimity in the near to mid term, such actions would ensue if the group were to incur material losses in its capitalization; have a severe reduction in the profitability of its core book of business; be unable to contain exposure to catastrophic events within its underwriting footprint with the current set of preventative measures; be unable to contain its current growth pattern; or have substantial adverse reserve development relative to its peers and the industrys averages.
The methodology used in determining these ratings is Bests Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bests rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: Risk Management and the Rating Process for Insurance Companies and Rating Members of Insurance Groups. Bests Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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