A.M. Best has assigned a financial strength rating of A- (Excellent) and long-term issuer credit rating of “a-” to Wakefield Insurance Company, based in Nashville, Tennessee.
The outlook assigned to these credit ratings is stable.
The ratings reflect Wakefield’s balance sheet strength, which A.M. Best assessed as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
Wakefield was established to provide property and liability insurance coverage to senior and affordable multifamily housing facilities with common management and ownership interests.
A.M. Best explains that the balance-sheet assessment is based on initial risk-adjusted capital that meets its criteria for newly formed companies and is expected to support exposures through a five-year startup period.
Capital and surplus is primarily in the form of a $25 million evergreen letter of credit. Operating performance is assessed as adequate based on historically favourable loss experience and a clearly defined business plan, which takes into consideration a level of execution and implementation risk.
A.M. Best explains: “As a startup captive operation writing a modest amount of deductible reimbursement premium, A.M. Best considers the company’s business profile to be limited. The ERM assessment of appropriate reflects a well-defined risk appetite with strict underwriting guidelines in place.”
“Key risks have been thoroughly identified and appropriate mitigation strategies have been developed by Wakefield’s experienced management team,” A.M. Best adds.
A.M. Best expects Wakefield to maintain its very strong balance sheet assessment, with favourable projected underwriting and overall operating performance contributing toward surplus growth.
A.M. Best states: “Negative rating action may occur if underwriting and/or overall operating performance compares unfavourably to expectations. Furthermore, negative rating action also may occur if risk-adjusted capitalisation were to decline considerably.”
