Oldwick, NJ -(BusinessWire)- AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to SUNZ Insurance Company (SUNZ) (Bradenton, FL). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect SUNZ’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
SUNZ was formed in 2005 and primarily writes high deductible worker’s compensation coverage utilizing its proprietary technology-driven platform focused on collateral management for its medium and small business clients.
SUNZ’s balance sheet assessment is supported by its risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio (BCAR) in current periods, projected future scores, and under stress scenarios. SUNZ balance sheet assessment also considers the capital contributions in support of recent premium growth, improved reserving patterns exhibited during the recent five-year period, its comprehensive reinsurance program diversified among highly rated participants, and a conservative investment portfolio that matches assets with liabilities.
SUNZ’s operating performance is assessed as adequate as evidenced by average pre-tax return on revenue measures that trail AM Best’s workers’ compensation industry composite over the recent five- and 10-year timeframe. SUNZ’s business profile assessment is limited as 49.9% of premiums are written in two states, California and Florida, when considering both direct and assumed premiums. Operating as a single line workers’ compensation insurer, SUNZ’s limited business profile exposes the company to the potential legislative, regulatory or judicial changes occurring within these states. SUNZ’s ERM approach is considered appropriate for the scale, scope and complexity of the organization.
While positive rating actions are unlikely over the near term, positive rating actions could be taken on SUNZ’s ratings should operating performance improve and be sustained at a level that is in line with peers with stronger operating performance assessments.
Key factors that could result in negative rating actions on SUNZ’s ratings and outlooks include a weakening in operating earnings to a level that is not supportive of the adequate operating performance assessment.
Negative rating actions could occur should adverse reserve development or strong premium growth result in a weakening in risk-adjusted capitalization that falls short of supporting the very strong balance sheet assessment.