|[August 29, 2013]
A.M. Best Affirms Ratings of Castle Key Group Members
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of
B- (Fair) and issuer credit ratings (ICR) of "bb-" of the members of Castle
Key Group (Castle Key) (headquartered in St. Petersburg, FL). The
outlook for all ratings is negative. (See below for a detailed listing
of the companies.)
The ratings and outlook reflect Castle Key's unfavorable operating
performance in most years and poor overall capitalization when measured
on a catastrophe stress-tested basis. Castle Key is the dedicated
Florida property writer for its parent company, Allstate Insurance
Company (Allstate), and it maintains significant exposure to
hurricanes, with a corresponding substantial reliance on catastrophe
reinsurance. In addition, Castle Key's reinsurance program relies
heavily upon the Florida Hurricane Catastrophe Fund (FHCF).
These rating factors are partially offset by Castle Key's recent
operating performance, which has been positively impacted by favorable
loss activity due to an absence of any hurricane events and increased
A.M. Best deviated from its "Rating Members of Insurance Groups"
criteria by providing more than two FSR levels of rating enhancement to
Castle Key's stand-alone asessment. However, the additional rating
enhancement acknowledges the historical financial and operational
support provided to Castle Key as part of the Allstate organization.
Although Castle Key is separately capitalized and not reinsured by
Allstate, in A.M. Best's opinion parental support regarding the claims
paying ability of Castle Key will be maintained commensurate with its
rating level in the event of frequent and/or severe hurricane activity.
If parental support is not provided, it would be necessary for A.M. Best
to re-evaluate the current FSR of A+ (Superior) and ICRs of "aa-" of
Allstate and all the remaining members of the Allstate Insurance Group.
Future positive rating actions may result from Castle Key producing more
favorable underwriting trends along with capital accumulation. However,
negative rating actions could result if parental support was not
provided in the case of multiple significant events.
The FSR of B- (Fair) and ICRs of "bb-" have been affirmed for the
following members of the Castle Key Group:
Castle Key Insurance Company
Castle Key Indemnity Company
Encompass Floridian Insurance Company
Encompass Floridian Indemnity Company
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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