A.M. Best announced it assigned a financial strength rating of A (Excellent) and an issuer credit rating of “a+” to American Shield Insurance Co. (American Shield) in Columbia, Mo. The outlook assigned to both ratings is stable.
The ratings reflect the implementation of a 100 percent quota share agreement between American Shield and its parent, Shelter Mutual Insurance Co. (Shelter Mutual). American Shield plans to sell property/casualty insurance products, underwritten through the parent, via independent agents located in Arizona. Products planned to be offered include private passenger auto, homeowners, as well as personal liability umbrella policies.
American Shield is expected to maintain strong risk-adjusted capitalization through its affiliation with Shelter Mutual. In an effort to ensure the new company is strong financially, Shelter Mutual contributed approximately $5 million.
Partially offsetting these positive rating factors are the company’s anticipated small scale of operations and limited product and geographic diversification in the new states. However, American Shield’s affiliation with Shelter Mutual, which maintains strong risk-adjusted capitalization and favorable operating performance, mitigates the anticipated risks of fluctuating operating performance and erosion of balance sheet strength for the company.
While A.M. Best believes the current rating is appropriately positioned, negative rating actions would ensue if there were a change in the relationship with the parent, overall results deteriorated or risk-adjusted capitalization declined materially.
Source: A.M. Best
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