AM Best reports that it has placed under review with developing implications the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating of “bbb” (Good) of Connecticut Attorneys Title Insurance Co. (CATIC) of Essex Junction, Vermont.
The credit ratings reflect CATIC’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
AM Best said the ratings reflect its analysts’ revised assessment of CATIC’s overall balance sheet strength to adequate from a strong level due to continued deterioration in policyholder surplus, as well as uncertainty around the legacy loss coming from its run-off captive.
According to the ratings agency, the deterioration in surplus in recent years is due to the “culmination of negative implications arising from the interest rate environment and dividends outpacing net results.”
The “under review with developing implications status” reflects CATIC’s efforts to strengthen the balance sheet to support business expansion and stabilize pressure on its balance sheet strength assessment, given the ongoing market challenges regarding profitability and improvement in surplus levels. According to AM Best, CATIC’s unfavorable five-year average combined and operating ratios underperform AM Best’s title insurance industry composite due to its high expense ratio in support of their expansion efforts.
However, the ratings agency added that company has improved these ratios in the past five years and generated profits in four of those years, supporting the adequate operating performance assessment.
AM Best further reported that CATIC continues to maximize growth investments while concurrently deploying expense reduction initiatives to alleviate its high expenses and improve its operating results. The limited business profile reflects the concentration that CATIC has as a monoline title insurer.
AM Best said it views CATIC’s ERM as appropriate.
Source: AM Best
Topics AM Best Connecticut
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