AM Best revises the outlook on the Long-Term Issuer Credit Rating of the two Vermont captives of US food retail group Kroger to negative from stable, citing deterioration in underwriting performance. The action covers Queen City Assurance, Inc. and Vine Court Assurance Incorporated, both domiciled in Burlington, Vermont and rated collectively as Queen City Assurance Group. AM Best affirms the Financial Strength Rating of ‘A’ (Excellent) and the Long-Term Issuer Credit Rating of ‘a+’ (Excellent) of both companies. The outlook on the Financial Strength Rating remains stable. The agency says the negative outlooks "reflect AM Best’s concerns regarding the deterioration in the group’s underwriting performance in recent years, which, if sustained, could pressure operating performance such that it no longer supports the current assessment". According to AM Best, underwriting results weakened in 2024 due to "an uncharacteristically high level of property losses", and deteriorated further in 2025, driven by "elevated casualty losses, including adverse reserve development, as well as pressure from the medical expense containment programme". Overall earnings remained positive, underpinned by investment income. The ratings reflect the group balance sheet strength, which AM Best assesses as strongest, together with strong operating performance, a neutral business profile and appropriate enterprise risk management (ERM). Risk-adjusted capitalisation is assessed at the strongest level as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best says the group consistently maintains strong liquidity measures while adhering to a conservative investment philosophy. The neutral business profile assessment reflects the broadly diversified range of coverages the group provides to Kroger across its operations. The two companies are single-parent captives writing tailored property and casualty cover for the parent. AM Best also takes account of the financial flexibility afforded to the companies by their publicly traded parent, which it describes as one of the largest companies in the food retail industry. The agency describes the group as an integral part of the Kroger ERM framework, with financial resources and support available to the captives, and states that it "expects the parent’s ability and willingness to support the captives will not change". The rating action is dated 8 October 2026. It follows an affirmation of 17 September 2025, in which AM Best affirmed the same Financial Strength Rating and Long-Term Issuer Credit Rating on both companies with stable outlooks throughout. That action recorded the 2024 property losses as uncharacteristically high, and stated: "Management has indicated that this level of loss activity does not represent a continuing trend." The stable outlooks in 2025 reflected what AM Best then described as its expectations that "the captives’ operating performances will remain stable and strong, while the earnings profile continues to support the group’s growth and business writing consistent with their capital and surplus positions". That action described the group as having favourable five and 10 year average combined and operating ratios and excellent return on revenue metrics, and said return on equity measures appearing lower than the broader industry were consistent with conservative underwriting leverage and with the group’s purpose as single-parent captives, "by which maximising profitability is not the primary objective".
