AM Best Removes from under Review with Negative Implications and Downgrades Credit Ratings of Cooperativa de Seguros Multiples de Puerto Rico
OLDWICK, N.J.--(BUSINESS WIRE)--Jan 23, 2019--AM Best has removed from under review with negative implications and downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb+” from “a-” of Cooperativa de Seguros Multiples de Puerto Rico (CSM) (San Juan, PR). The outlook assigned to these Credit Ratings (ratings) is stable.
The rating downgrades reflect CSM’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).
The ratings were previously placed under review on Oct. 1, 2018, in response to the company’s second-quarter statutory filing that reported a significant decline in policyholder surplus, driven by adverse development on losses from Hurricane Maria of approximately $30 million. In addition, losses at a previously owned subsidiary were substantial and drove additional losses in CSM’s surplus.
While the surplus loss was significant, results through nine months and projected year-end partially tempered the overall year-over-year decline. Additionally, the company’s balance sheet assessment remains very strong due to the purchase of additional catastrophe reinsurance protection regarding future potential catastrophe events.
Despite this, the downgrades are driven by the revised assessment of CSM’s ERM program, which AM Best now categorizes as marginal, as the risk management capabilities do not align fully with the company’s risk profile. Demonstrated weakness has been observed given the level of catastrophe losses relative to prior reinsurance purchasing decisions for enterprise. While the losses associated with Hurricane Maria were unprecedented in nature, the size of the loss lead to a marginal assessment. While management is refining and enhancing the overall ERM framework and capabilities, the ultimate effectiveness of these changes remains uncertain.
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 web page. For additional information regarding the use and limitations of Credit Rating opinions, please view . For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view .
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
View source version on businesswire.com:https://www.businesswire.com/news/home/20190123005782/en/
CONTACT: Brian O’Larte
+1 908 439 2200, ext. 5138
Manager, Public Relations
+1 908 439 2200, ext. 5159
+1 908 439 2200, ext. 5432
Director, Public Relations
+1 908 439 2200, ext. 5644
KEYWORD: UNITED KINGDOM UNITED STATES EUROPE NORTH AMERICA NEW JERSEY
INDUSTRY KEYWORD: PROFESSIONAL SERVICES INSURANCE
SOURCE: AM Best
Copyright Business Wire 2019.
PUB: 01/23/2019 03:39 PM/DISC: 01/23/2019 03:39 PM