A.M. Best has downgraded the issuer credit rating to "bb" from "bb+" and affirmed the financial strength rating of B (Fair) of Sorford Surety Insurance. The outlook for both ratings has been revised to negative from stable.
The company is a subsidiary of IBT Group, LLC, which itself is a subsidiary of Eurofinsa S.A.
Eurofinsa and IBT are members of a multinational group of companies that specialise in the development, design, construction, equipment and finance of public infrastructure projects around the world.
A.M Best has stated that Sorford's risk-adjusted capitalisation is “relatively adequate for its rating level”, though the issuer credit rating downgrade reflects concerns associated with the company's lack of sustainable business volume since its inception in 2010 and the related deterioration of capital and surplus due to administrative expenses.
A.M. Best is also concerned with Sorford's ability to meet the assumptions included in its business plan, along with the impact of economic volatility and the possibility that Sorford could be exposed to “a confluence of events that will test its capital strength”.
The ratings company has stated that it will monitor the quarterly performance of Sorford against its stated operating plan.
Any material adverse deviations with regard to management, earnings, capitalisation or risk profile could potentially undermine the stability of the assigned ratings.
Key triggers that could result in positive rating actions would be Sorford generating consistent net income, limiting its losses, meeting or exceeding its business plan and steadily improving its credit metrics to support the ratings over the long term.
