Illinois’ Dover Bay Specialty Insurance Company Downgraded by AM Best

AM Best has downgraded the Financial Strength Rating (FSR) to B++ (Good) from A (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” (Good) from “a” (Excellent) of Dover Bay Specialty Insurance Company (Dover Bay) based in Bloomington, Illinois. The outlook of the FSR has been revised to stable from negative while the outlook of the Long-Term ICR is negative.

The Credit Ratings (ratings) of Dover Bay reflect its balance sheet strength, which AM Best assesses as strong, as well as its marginal operating performance, limited business profile and appropriate ERM. The ratings also reflect lift, as defined within Best’s Credit Rating Methodology, from its parent, State Farm Mutual Automobile Insurance Company.

The rating downgrades reflect Dover Bay’s persistent underwriting losses since 2021 – at which time AM Best revised the outlooks to negative – as a result of numerous weather-related losses affecting the states in which most of its underwriting exposures are based, most notably Louisiana, Texas and other Gulf Coast and South Atlantic states.

Although Dover Bay has reduced its net risk retention through the purchase of external reinsurance, the cost of such protection has increased significantly following adverse industry-wide catastrophe loss experience, AM Best said. The repeated loss events have resulted in net underwriting losses, contributing to deterioration in capital and surplus. Dover Bay underwrites primarily homeowners insurance on an excess and surplus lines basis, primarily in southern coastal territories.

Source: AM Best

Topics Carriers Excess Surplus AM Best Illinois