OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best Co. has upgraded the financial strength rating to B++ (Good) from B+ (Good) and issuer credit rating to “bbb” from “bbb-” of Stonetrust Commercial Insurance Company (Stonetrust) (Baton Rouge, LA). The outlook has been revised to stable from positive.
“The Treatment of Terrorism Risk in the Rating Evaluation”
The rating upgrades reflect Stonetrust’s solid capitalization, profitable earnings achieved through strong underwriting performance and consistent investment income, and management’s underwriting experience within its niche workers’ compensation marketplace.
Partially offsetting these positive rating factors are the areas of adverse reserve development in Stonetrust’s prior accident years, its concentrated market profile operating as a monoline insurer writing predominantly in a single state and the execution risk associated with premium growth in contiguous states while maintaining pricing adequacy. Despite these concerns, the company’s rating outlook is reflective of improved capitalization and A.M. Best’s expectation that solid operating performance will be sustained over the near term and will contribute to organic surplus growth.
The principal methodology used in determining these ratings is Best’s Credit Rating Methodology — Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “The Treatment of Terrorism Risk in the Rating Evaluation”; and “A.M. Best’s Ratings & the Treatment of Debt.” Methodologies can be found at www.ambest.com/ratings/methodology.