AM Greatest has downgraded the Monetary Energy Score (FSR) to B++ (Good) from A- (Wonderful) and the Lengthy-Time period Issuer Credit score Score (Lengthy-Time period ICR) to “bbb+” (Good) from “a-” (Wonderful)
The Credit score Rankings (rankings) replicate ATI’s steadiness sheet energy, which AM Greatest assesses as very robust, in addition to its marginal working efficiency, restricted enterprise profile and acceptable enterprise threat administration.
The ranking downgrades replicate ATI’s extended deterioration of web premiums written, which has led to elevated stress on the corporate’s key underwriting ratios. The corporate has reported premium declines in every of the previous 5 years, stemming primarily from the reductions in NCCI loss prices that the corporate makes use of to calculate premiums. This pattern has accelerated in recent times, with ATI reporting double-digit share decreases in premium in every of the previous three years, together with further declines via the primary half of 2022. The corporate has skilled greater volatility in its underwriting outcomes after policyholder dividend and in addition has reported decrease ranges of total income. Lastly, decrease premiums additionally might make paying policyholder dividends more difficult, limiting their effectiveness as a retention software.
The revision of the Lengthy-Time period ICR outlook to damaging from steady displays stress on the steadiness sheet evaluation from the aforementioned points surrounding the corporate’s premium declines, if additional deterioration in working efficiency had been to erode the corporate’s surplus stage. ATI’s steadiness sheet energy is supported by its risk-adjusted capitalization, as measured by Greatest’s Capital Adequacy Ratio (BCAR), which stays on the strongest stage, regardless of vital declines in surplus measurement. The rankings additionally replicate the corporate’s restricted enterprise profile on account of its concentrated geography and restricted product choices.
Detrimental ranking motion might happen if there may be materials deterioration in risk-adjusted capitalization or surplus, or if the enterprise profile narrows as a result of firm’s strategic adjustments.
This press launch pertains to Credit score Rankings which have been revealed on AM Greatest’s web site. For all ranking info regarding the discharge and pertinent disclosures, together with particulars of the workplace liable for issuing every of the person rankings referenced on this launch, please see AM Greatest’s Current Score Exercise internet web page. For extra info relating to the use and limitations of Credit score Score opinions, please view Information to Greatest’s Credit score Rankings. For info on the correct use of Greatest’s Credit score Rankings, Greatest’s Efficiency Assessments, Greatest’s Preliminary Credit score Assessments and AM Greatest press releases, please view Information to Correct Use of Greatest’s Rankings & Assessments.
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