Global ratings agency AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Victor Insurance Exchange (Victor Exchange)
The outlook assigned to these Credit Ratings is stable.
The ratings reflect Victor Exchange’s balance sheet strength, which Best assesses as very strong.
Best also cited the company’s adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
If you recall, it was in June when Victor Insurance Managers LLC, the global managing general underwriter, launched Victor Exchange, a reciprocal insurance exchange, to deliver additional US property catastrophe capacity to existing and new policyholders of Victor’s subsidiary, International Catastrophe Insurance Managers LLC (ICAT).
Going back to Best, the ratings agency noted that the very strong balance sheet strength assessment reflects Victor Exchange’s strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR) reflecting initial capitalization by its financial sponsor, Gallatin Point Capital.
Best stated that it expects Victor Exchange’s risk-adjusted capitalization to remain within the “strongest category” with additional positive assessment factors contributing, which includes a low-risk conservative investment portfolio and comprehensive reinsurance programs with a diversified panel of participants.
Best said: “Partially offsetting these strengths is Victor Insurance Exchange’s high financial leverage due to initial capitalization via a surplus note, exposure to catastrophe losses and modest reliance on reinsurance given its risk profile.”
In addition, Best also explained that it assesses Victor Exchange’s operating performance as adequate based on its projection, as well as the fact that anticipated writings and associated historical loss ratios are well known to the firm via its exclusive MGA, ICAT.
Elsewhere, the ratings agency also views Victor Exchange’s business profile as neutral given ICAT’s demonstrated extensive industry experience in managing the business through various underwriting cycles.
However, while there is execution risk in implementing the firm’s business plan, Best noted how this is tempered by its demonstrated track record and available resources provided via both Gallatin Point Capital and its strategic sponsor, Marsh McLennan.
Victor Exchange’s ERM capabilities are anticipated to benefit from the overall framework developed and utilized by ICAT, concluded Best.
