AM Best has revised the outlooks to ‘negative’ from ‘stable’ and affirmed the financial strength rating of ‘A-’ (Excellent) and the long-term issuer credit rating of ‘a-’ (Excellent) for Riverfront Insurance, before withdrawing the ratings at the company’s request. The ratings reflect Riverfront’s strong balance sheet, adequate operating performance, limited business profile, and appropriate enterprise risk management. According to AM Best, the captive maintains the strongest level of risk-adjusted capitalisation, as measured by Best’s capital adequacy ratio, supported by a net worth maintenance agreement from its parent. This is offset by a high annual aggregate retention level relative to surplus. Riverfront’s adequate operating performance is based on favourable metrics in recent years. The captive was established by its parent, Navient Corporation, in response to hard market conditions for directors and officers and errors and omissions coverage. Elevated risk from its parent’s student loan activities has since diminished, while exposures are further mitigated as the company writes only claims-made policies — with no claims reported to date. Riverfront does not use reinsurance, with enterprise risk management integrated into Navient’s broader framework to cover potential exposures in line with market pricing and conditions. AM Best says the negative outlooks reflect pressures on the company’s risk-adjusted capitalisation and the potential for a significant decline in shareholder equity.
