AM Best Downgrades Credit Ratings of Prime Insurance Company; Maintains Under Review With Negative Implications Status
AM Best has downgraded the Financial Strength Rating to B (Fair) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bb+” (Fair) from “a-” (Excellent) of Prime Insurance Company (Prime) (Chicago, IL). Concurrently, AM Best has maintained the under review with negative implications status for these Credit Ratings (ratings).
The ratings of Prime reflect its balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, neutral business profile and marginal enterprise risk management (ERM).
These rating actions reflect AM Best’s continuing concerns related to the adequacy of the company’s loss reserves and its decreasing risk-adjusted capitalization contributing to a lower overall balance sheet assessment. AM Best also revised the assessment of Prime’s ERM to marginal from appropriate reflecting concerns regarding the effectiveness of Prime’s reserve risk management relative to the size and complexity of this risk. The marginal assessment also contemplates the effectiveness of the company’s capital management plans and the potential regulatory implications related to lower risk-based capital levels as prescribed by the National Association of Insurance Commissioners. Management’s ability to meet these required levels is another consideration.
