AM Best revised the outlook from stable to positive for the long-term issuer credit rating (long-term ICR) and confirmed the financial strength rating (FSR) of A (excellent) and the long-term ICR of ” a ”(excellent) of Primary Insurance Company (Premium) (
Credit ratings reflect the strength of Prime’s balance sheet, which AM Best considers to be very strong, as well as its strong operational performance, neutral business profile and appropriate management of corporate risks.
The revised long-term outlook for ICR to positive recognizes Prime’s historically favorable year-over-year operating results and the expectation that Prime’s operating performance, in particular underwriting results , continues to outperform its peers in the excess lines sector. The positive long-term outlook for the ICR also takes into account the continued very good assessment of the strength of Prime’s balance sheet, supported by a return to favorable development in loss reserves, while maintaining its lowest level. higher risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR).
Prime’s strong operating performance far exceeds that of other participants in the excess insurance industry, which is attributable to its adherence to strict underwriting discipline, aggressive complaint tactics and its ability to charge premiums. higher premiums and handwritten policy terms and coverage as an opportunistic insurer that does not compete on price. Five-year average loss ratios exceed the AM Best composite by about 20 percentage points. The company accesses quality business thanks to its multi-level distribution capabilities to which it applies its good underwriting and policy issuance practices and risk-adjusted pricing with restrictive conditions. The company also has an internal risk management team that partners with policyholders to control loss exposure and reduce the severity of incidents, as well as an experienced internal claims unit that vigorously defends and protects the interests of policyholders. insured while seeking a fair settlement of claims. These practices have generated combined and operating ratios that easily outperform similarly assessed peers.
There are some concerns about the level of growth reported by Prime over the most recent period. AM Best plans to monitor the rapid growth of Prime’s premiums as the company seeks new business opportunities in the commercial automotive liability industry – a market that has been severely strained in recent years. So far, the company has managed to generate significant growth and profits in this dislocated market. Historical loss ratios appear relatively stable since the company entered the commercial automotive market in 2013. The company has incorporated several lessons learned from this period to further improve and stabilize underwriting results. Spending remains very low compared to the industry, which explains its above-average results each year.
The rating assertions reflect Prime’s highest level of risk-adjusted capitalization which continues to support the aforementioned growth, with excess growth driven by underwriting profitability even with conservative reserves.
Prime has a neutral business profile as the predominant excess line insurer licensed to operate in all 50 states and as a licensed licensed insurer in states that require licensed papers. Enterprise risk management is appropriate for the business and is the link that unites the business as a focused insurance company that leverages its excess line expertise for the benefit of the business and its policyholders to to find solutions for its policyholders and a partnership in the area of claims management and resolution.
This press release relates to credit ratings published on the AM Best website. For all rating information relating to the publication and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this publication, please see AM Best’s Recent Rating Activity webpage. . For more information on the use and limitations of credit rating reviews, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best Credit Ratings, Best Preliminary Credit Ratings, and AM Best press releases, please see the Guide to Appropriate Use of Best Ratings and Ratings.
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Source: AM Best