Oldwick, NJ -(BusinessWire)- AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Synergy Comp Insurance Company (Synergy) (Sharon, PA). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Synergy’s balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management (ERM).
Synergy was formed in 2005 and began writing workers’ compensation (WC) in September 2006, with a focus on creating safer work environments through the reduction of the frequency and severity of workplace accidents while utilizing employee return-to-work programs and establishing supervisor accountability.
Synergy’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is categorized as strongest, reflective of organic surplus growth achieved through strong operating performance, which has benefited from sustained favorable reserve development patterns over the long term that has driven retained earnings. Synergy’s balance sheet strength is considered very strong and in addition to these indicated positive factors, also considers the modestly elevated net underwriting leverage measures and limited financial flexibility operating as a privately held organization.
AM Best assesses Synergy’s operating performance as strong, as evidenced by its average pre-tax return on revenue measures that have outperformed the WC industry composite over the recent five and 10-year timeframe. Synergy’s business profile assessment is limited, as the majority of written premiums are written in Pennsylvania. As a monoline WC insurer, the company’s limited business profile leaves it susceptible to potential legislative, regulatory or judicial changes occurring in Pennsylvania. ERM capabilities are considered appropriate for the company’s risk profile.
While positive rating actions are unlikely over the near term, positive rating actions could be taken on Synergy’s ratings if balance sheet strength improves over time through retained earnings.
Key factors that could trigger negative rating actions on Synergy’s ratings and outlooks include a weakening in underwriting performance or operating earnings to a level not considered commensurate with strong operating performance. Negative rating actions could occur if adverse reserve development results in a weakening in operating performance or risk-adjusted capitalization to a level not considered supportive of AM Best’s individual building block assessments. Negative rating actions also could occur if strong premium volume growth results in a reduction in risk-adjusted capitalization to a level that is no longer supportive of Synergy’s ratings.
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