A.M. Best has downgraded the outlook to negative from stable, and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Commonwealth Contractors Group Self-Insurance Association (CCGSIA) in Richmond, Virginia.
“The ratings reflect CCGSIA’s strong capitalization, generally profitable pre-dividend underwriting results over the past 10 years and its niche market expertise. Partially offsetting these positive rating factors are CCGSIA’s increasing net underwriting losses over the past three years as well as its increasing enterprise wide losses.
Overall capitalization still supports the current ratings; although, it has trended lower over the past three years,” said a statement from the ratings firm.
CCGSIA was established to provide a stable, profitable workers’ compensation market for contractors and other construction-related accounts in Virginia.
A.M. added that through the use of sound risk management and loss control programs as well as maintaining a low operating overhead, the company has been able to offer its members significant dividends in addition to stable premium rates.
“CCGSIA is very discretionary in admitting new insured members and requires firms to be financially sound and able to demonstrate effective safety programs with good loss records. Furthermore, insureds must maintain good loss experience to both receive dividends and maintain membership in the program."
However, the firm stated that it is unlikely to upgrade the ratings of CCGSIA in the future due to its limited market profile and business concentration, also warning that negative ratings actions may occur if CCGSIA continues to generate net underwriting losses and/or its surplus continues to decline.
