AM Best Revises Outlooks to Negative for Members of ReAlign Insurance Group
AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of "a" (Excellent) for the members of ReAlign Insurance Group (ReAlign) (Dallas, TX). (See below for a detailed listing of the companies and Credit Ratings [ratings].)
The ratings reflect ReAlign's balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The negative outlooks reflect AM Best's concerns over ReAlign's unfavorable operating performance in recent years, which was driven by a deterioration in underwriting results. This deterioration was attributable to an elevated level of fire and weather-related losses. In 2022 and through the first half of 2023, the group's underwriting results were driven by an increase in both severity and frequency of losses. Also, inflationary pressures have impacted results with considerable loss cost increases. As a result, the group has required capital contributions from the parent, in support of its expansion plans.
ReAlign's management is addressing the volatility through rate increases, aggressive re-underwriting of its book of business, non- renewing of risks in certain territories and increasing mandatory deductibles in weather prone areas. While these actions may result in stabilization of recent trends, failure to execute on these strategic plans could result in a downward revision of the group's adequate operating performance assessment.
The FSR of A (Excellet) and the Long-Term ICRs of "a" (Excellent) have been affirmed with the outlooks revised to negative from stable for the following members of the ReAlign Insurance Group:
This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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