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FOR IMMEDIATE RELEASE
OLDWICK - MAY 22, 2014 03:00 PM (EDT)
A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of B+ (Good) and issuer credit rating of "bbb-" of PrimeOne Insurance Company (PrimeOne) (Farmington Hills, MI).
The rating actions take into account PrimeOne's decision announced on May 2, 2014 to cease operations and begin the process of running off its existing book of business. The ratings and outlook reflect PrimeOne's adequate balance sheet capitalization driven by relatively modest underwriting leverage and negligible investment profile, in addition to its strong liquidity.
Partially offsetting these positive rating factors is the execution risk associated with the run off, specifically concerning the current book of business and whether the loss reserves associated with existing claims, and incurred but not reported claims, develop favorably or unfavorably.
There is the potential that the company could encounter some difficulty executing its run-off plan. The executives and employees that remain will need to meet the significant challenges associated with successfully administering an effective run off. To help meet these challenges, the company has engaged the services of a reportedly well-known and highly regarded firm to guide it through the transition. As part of the services offered, the firm's principal is assisting PrimeOne as interim president throughout the run off. Over the years, PrimeOne's ownership has demonstrated its intent to support the company, evidenced most recently through a $4.0 million capital contribution during the fourth quarter of 2013 to help offset operating losses.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.