AM Best affirms the financial strength rating of ‘A-’ (Excellent) and the long-term issuer credit rating of ‘a-’ (Excellent) of Prism Assurance, the single-parent captive insurance company of Apogee Enterprises. The outlook on both ratings is ‘stable’. The ratings reflect Prism's balance sheet strength, which AM Best assesses as very strong, alongside adequate operating performance, a limited business profile and appropriate enterprise risk management. The balance sheet strength assessment is supported by risk-adjusted capitalisation at the strongest level, as measured by Best's Capital Adequacy Ratio. AM Best notes that Prism has sufficient liquidity, supported by the ability to call on its loan-back to the parent and by the financial flexibility available through Apogee. As a single-parent captive, Prism benefits from a low expense structure with minimal distribution, producing an expense ratio much lower than that of traditional commercial insurers. AM Best identifies manageable volatility in underwriting performance arising from the low frequency, high severity claims the captive was established to cover. Apogee contributes trademarks and associated royalty income to the captive, alongside interest from the parent loan-back, providing a steady stream of net investment income. AM Best says profitability metrics for return on revenue, return on equity and return on invested assets far exceed industry averages over five and 10-year terms. Prism is a Vermont-domiciled captive based in Burlington, and provides very specific lines of coverage to Apogee, which AM Best describes as one of the largest architectural design and construction companies in the US. The business profile assessment of limited reflects that concentration, although the underlying risks carry a level of geographic diversification reflecting the scope of the parent's operations. The captive is interwoven into Apogee's enterprise risk management programme and works with business units across the organisation to reduce claims severity and frequency. The ‘stable’ outlooks reflect AM Best's expectation that the captive will maintain its balance sheet strength and adequate operating performance, supported by risk-adjusted capitalisation at the strongest level, steady streams of income from intangible assets and the execution of prudent risk management strategies.
