AM Best has affirmed the financial strength rating of A (Excellent) and the long-term issuer credit of “a-” (Excellent) of KW Specialty Insurance.
AM Best has also revised its outlooks on KW Specialty from negative to stable.
These ratings reflect KW Specialty’s balance sheet strength, which AM Best assesses as very strong. They also reflect adequate operating performance, limited business profile and appropriate enterprise risk management.
According to AM Best, the revision of its outlook reflects KW Specialty’s good 2022 operating results. KW Specialty successfully executed its plans to write programme business on a direct basis with prudent underwriting.
In late 2021, KW Specialty entered into a loss portfolio transfer agreement with a Delaware captive, owned by its parent company, Kramer-Wilson Company. It ceded all of its loss reserves from some assumed programmes that the company exited in 2021, which generated poor results for KW Specialty in previous years.
The development of these programmes no longer affects KW Specialty’s operating results, says AM Best, which is reflective in its view that the company is “back on track” to meet its original business plans.
As part of its startup process, the company’s expense ratio is currently quite high from building out systems and hiring staff. However, AM Best expects it to gradually decrease as the company builds out its premium base in the next two to three years.
