AM Best has placed under review with negative implications the Financial Strength Rating (FSR) of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” (Excellent) of GuideOne Insurance Company and its wholly owned subsidiaries collectively referred to as GuideOne Insurance Companies (GuideOne). All companies are domiciled in West Des Moines, Iowa.
These ratings have been placed under review with negative implications given AM Best’s concerns with a significant decline in surplus and risk-adjusted capital ratios. GuideOne has taken initial steps to seek out capital solutions and the transaction would likely take the form of an affiliation or mutual holding company merger combined with reinsurance and/or other capital guarantees.
AM Best notes that a successfully executed transaction could mitigate a material decline in GuideOne’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The decline was caused by a significant deterioration in surplus in 2022 driven primarily by a net loss, along with unrealized capital losses.
The net underwriting loss reflects significant prior-year reserve development of GuideOne’s direct, open market E&S Specialty business that has now been exited, as well as current accident year reserve strengthening due to rising loss costs and an increase in claims frequency, particularly in the aforementioned E&S business. AM Best notes that the company’s current BCAR score has weakened in relation to its current rating level.
The ratings will remain under review with negative implications while AM Best monitors the progress of the aforementioned transaction and has the opportunity to fully assess the impact of the transaction, once fully implemented. Failure to execute on the transaction in a timely manner will likely result in a downgrade of the balance sheet assessment and the overall rating of the company.
The FSR of A- (Excellent) and the Long-Term ICRs of “a-” (Excellent) have been placed under review with negative implications for the subsidiaries of GuideOne Insurance Company:
- GuideOne Specialty Insurance Company
- GuideOne America Insurance Company
- GuideOne Elite Insurance Company
- GuideOne National Insurance Company
- GuideOne Property & Casualty Insurance Company
Source: AM Best
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