A.M. Best has assigned a financial strength rating (FSR) of A- (Excellent) and an issuer credit rating (ICR) of "a-" to Housing Specialty Insurance Company (HSIC). The outlook assigned to both ratings is stable.
Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the ICRs of "a" of Vermont-based companies: Housing Authority Property Insurance (HAPI), Housing Authority Risk Retention Group (HARRG) and their jointly owned subsidiary, Housing Enterprise Insurance Company (all members of and together known as the HAI Group).
The ratings of HSIC reflect its strong capital position and the support it receives from the HAI Group, according to A. M. Best.
HSIC is an excess and surplus lines insurer that provides a non-traditional insurance programme to public and affordable housing providers throughout the US, as well as a for-profit, property and casualty stock insurer, which was incorporated in Vermont on 9 December 2013. The company is jointly owned by HARRG and HAPI as a subsidiary.
Partially offsetting these positive rating factors is the start-up nature of the company, which is mitigated by the successful performance and support of the HAI Group.
With its solid operating performance, HAI Group has progressively built up its surplus through retained earnings, as its underwriting leverage is very low. The group's underwriting results remain strong due to its focused and disciplined underwriting approach and conservative reserving.
Over the years, it has increased rates when appropriate and withdrawn from problematic accounts and lines of business, such as workers' compensation.
In addition, HAI Group's operating performance benefits significantly from effective enterprise risk management, its tax efficient structure and strong client relationships, which are supported by a number of customised programmes and services.
Partially offsetting these positive rating factors is the group's concentration of risk in the public housing authority sector, which magnifies the impact of market cycles and public policy and legislative changes.
A.M. Best has stated that it expects HAI Group's future operating performance to be stable and strong: “As the stable earnings profile should support controlling its growth and business writings, which are consistent with its capital and surplus position.”
The ratings of HSIC and HAI Group are not expected to be upgraded nor their outlooks revised within the next 12 to 24 months, as their operating performance and capital position have already been considered in A.M. Best rating process.
