Oldwick, NJ -(BusinessWire)- AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” (Good) from “bbb+” (Good) and affirmed the Financial Strength Rating (FSR) of B++ (Good) of Alaska Timber Insurance, Inc. (ATI) (Ketchikan, AK). The outlook of the FSR has been revised to negative from stable, while the outlook for the Long-Term ICR is negative.
The Credit Ratings (ratings) reflect ATI’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, very limited business profile and appropriate enterprise risk management.
The downgrading of the Long-Term ICR reflects a decline in AM Best’s assessment of ATI’s business profile, which is the result of management’s recent decision to discontinue writing new workers’ compensation policies and to run off its existing policies. As of Jan. 1, 2023, the company non-renewed its current book of business and will no longer have any policies in force; consequently, warranting a downgrade in its business profile since the company is exiting its sole line of business in the Alaskan workers’ compensation market.
The negative outlooks reflect the pressure on ATI’s overall balance sheet strength and the potential for balance sheet strength assessment components to deteriorate materially due to the company’s weakening operating performance from an adverse development of claims, while the company operates in runoff. Negative rating action could occur if there is a material deterioration in risk-adjusted capitalization or in any additional balance sheet strength components.
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Source: BusinessWire