A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of “B+ (Good)” and issuer credit rating of “bbb-” of Preferred Contractors Insurance Company Risk Retention Group (PCIC).
The ratings reflect PCIC’s adequate level of risk-adjusted capitalisation and recent improvements in operating performance.
The ratings also reflect PCIC management’s substantial expertise in marketing the type of business it writes.
In a recent release A.M. Best, said: “Partially offsetting these positive rating factors are PCIC’s volatile operating results during the first five years of operation, high expense ratio and limited business profile.”
“An additional offsetting rating factor is the execution risk associated with the implantation of PCIC’s business plan.”
The stable outlook recognises two consecutive years of PCIC’s improved underwriting results, therefore reducing A.M. Best’s concerns surrounding its historical volatile performance.
Upward rating movement is unlikely over the medium term. However, a deterioration in PCIC’s underwriting and overall operating performance or a substantial weakening in its risk-adjusted capitalisation could result in negative rating pressure.
