AM Best has downgraded the Long-Term Issuer Credit Ratings (Long-Term ICR) to “a” from “a+” and affirmed the Financial Strength Rating (FSR) of A (Excellent) of Farmington Hills, Mich.-based Atain Specialty Insurance Co. and Atain Insurance Co., collectively referred to as Atain Insurance Companies (AIC).
The outlook of the Long-Term ICRs has been revised to stable from negative, while the outlook of the FSR remains stable.
The credit ratings reflect AIC’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
While the FSR of A (Excellent) has been affirmed, the downgrade of the Long-Term ICRs is the result of AIC’s operating performance assessment being lowered to adequate from strong. This action follows the revision of the group’s Long-Term ICR outlook to negative from stable in January 2019 and is based on the insurer’s latest five-year average operating results, which no longer support the levels expected of a strong performance assessment, but is more in line with its peers; hence the adequate assessment.
AIC’s risk-adjusted capitalization and overall balance sheet assessment remains at the strongest level. Additionally, AIC benefits from its affiliation with AJK Enterprises in terms of resources and services, as well as access to Burns & Wilcox, Ltd., one of the largest independently owned insurance wholesalers in the United States.
As a member of AJK Enterprises, AIC has the ability to participate in mature programs produced by its affiliated wholesaler, which over the years have proven to be very successful. Over the years, AIC also has benefited from synergies and resources afforded by the AJK group. While some of these cost benefits are still available to Atain, an allocation of costs related to system enhancements and personnel resulted in higher-than-average allocated expenses for Atain in recent years.
AIC is formed by the consolidation of Atain Specialty Insurance Co. and its wholly owned subsidiary, Atain Insurance Co. Both companies participate in an intercompany reinsurance pooling agreement.
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