KBRA Assigns Rating to Apex Star Reciprocal Exchange and Affirms Rating for Star Vantage Reciprocal Exchange
27 Jun 2025 | New York
KBRA assigns a BBB Insurance Financial Strength Rating (IFSR) to Apex Star Reciprocal Exchange ("Apex Star") and affirms the BBB IFSR for Star Vantage Reciprocal Exchange ("Star Vantage"). The Outlook for both ratings is Stable.
Star Vantage is a recently formed Mississippi domestic reciprocal property and casualty insurance which writes personal lines and commercial lines business on an admitted basis in Mississippi and on a surplus lines basis in other states. Apex Star is a new Florida domestic reciprocal property and casualty insurance company which also writes personal lines and commercial lines business, being on an admitted basis in Florida and a surplus lines basis in other states. Both companies are headquartered in Florida.
Key Credit Considerations
The ratings reflect both companies’ low underwriting leverage and significant surplus relative to projected premiums written. The ratings also reflect a favorable market opportunity in the Southeast property market. The management team has solid insurance industry experience and writes highly customizable policies which it views as a competitive advantage. Additionally, as recently formed start-up insurers, Star Vantage and Apex Star have no legacy liabilities. Both companies have minimal start-up expenses due to an organizational structure whereby the Attorney-in-Fact (AIF) incurs the majority of start-up costs.
Balancing these strengths is the company's high financial leverage due to 100% of Apex Star’s surplus base and nearly 100% of Star Vantage’s surplus base consisting of surplus notes. Furthermore, as property writers in the Southeast, both companies will have product and geographic concentration, natural catastrophe exposure due to hurricanes and high reinsurance dependence that, depending on availability and affordability, could materially impact results. Lastly, as de novo insurers, Star Vantage and Apex Star's future profitability is uncertain and dependent upon management executing its business plan.
Rating Sensitivities
A material favorable variance to business plans provided to KBRA including a faster reduction of financial leverage, a consistent trend in organic surplus growth, improved financial flexibility and access to capital and/or a favorable change in risk profile could result in positive rating action.
A material unfavorable variance to business plan provided to KBRA, significant weather events that materially impact earnings and capital, an inability to obtain reinsurance on acceptable terms and pricing, causing an increase in loss exposure, a reduction in the company’s ability to underwrite policies or a drag on earnings, an unfavorable change in risk profile and/or a departure of key members of the management team without suitable replacement could result in negative rating action.
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