A.M. Best has affirmed a financial strength rating of "B (Fair)" and issuer credit rating of “bb+” to Sorford Surety Insurance Company. The outlook for both ratings is stable.
Sorford Surety is a wholly owned subsidiary of IBT Group, which is a subsidiary of Eurofinsa S.A. IBT and Eurofinsa are members of a multinational group of companies that specialise in the development, design, construction, equipment and finance of public infrastructure projects.
The ratings for Sorford Surety are based on “supportive risk-based captilisation and the explicit financial guarantee from IBT. Also inuring to the ratings is incorporation of a favorable business plan, upon which the profitability and liquidity metrics of the ratings are based, as well as the benefits from the management and underwriting expertise provided by Willis Management,” said A.M Best.
“Partially offsetting these positive ratings factors is the start-up nature of Sorford, its limited market scope/business profile, product mix and dependence on third parties for processing, servicing and administration. Furthermore, the company’s relatively large (gross) underwriting exposures, as it offers high gross insurance limits and execution risk associated with the implementation of Sorford’s business plan.”
A.M Best has highlighted Sorford Surety’s fundamental business strategies of providing stable risk products including bid, performance and down payment surety bonds to be key lines of business, alongside service for IBT.
“While the business that will be written has a history of strong underwriting results, to protect the company from undue risk exposure and underwriting volatility in its startup phase, Sorford will place various excess-of-loss with external reinsurers.”
The ratings agency is also concerned that Sorford may not meet the rules included in its new business plan, leading to economic volatility and capital breakdown. A.M. Best will monitor the quarterly performance of Sorford Surety as any deviations regarding management, earnings, captialisation or risk profile could undermine the companies current ratings stability.
“Conversely, key rating triggers that could result in positive rating actions would be Sorford generating consistent net income, limiting its losses and meeting and/or exceeding its business plan and credit metrics that improve steadily supporting the ratings over the long term.”
