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FOR IMMEDIATE RELEASE
OLDWICK - APRIL 13, 2022 01:53 PM (EDT)
AM Best has assigned a Financial Strength Rating of B (Fair) and a Long-Term Issuer Credit Rating of “bb+” (Fair) to Palmetto Surety Corporation (Palmetto) (Mount Pleasant, SC). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Palmetto’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
Palmetto is a mono-line surety writer primarily engaged in providing bail surety through its agents. The company also underwrites commercial surety and contract surety bonds. Palmetto operates in eight states, primarily located in the Southeast, and intends to broaden its geographic footprint by expanding into additional states.
The ratings of Palmetto reflect its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by a prudent investment portfolio and favorable development of prior year loss reserves. Offsetting these positive rating factors is the significant use of surplus notes, which negatively impacts the quality of capital, and the high financial leverage at Palmetto’s parent, United Holding Group, LLC. The ratings also reflect Palmetto’s adequate underwriting and operating results in the recent five-year period, which have benefited from the company’s established underwriting guidelines and investments in its bail surety software platform. Palmetto’s limited business profile reflects its narrow product focus and geographic concentration in the Southeast, which exposes the company to potential legislative or regulatory challenges. AM Best considers Palmetto’s ERM program to be appropriate for its size and scope of operations.
The stable outlooks reflect AM Best’s expectation that Palmetto will maintain adequate balance sheet strength over the intermediate term with adequate operating results contributing to surplus growth.
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.