KBRA Assigns Rating to Star Vantage Reciprocal Exchange

KBRA assigns a BBB Insurance Financial Strength Rating (IFSR) to Star Vantage Reciprocal Exchange. The Outlook for the rating is Stable.

Star Vantage Reciprocal Exchange ("Star Vantage") is a new Mississippi domestic reciprocal property and casualty insurance company headquartered in New Port Richey, FL which will write personal lines and commercial lines business on an admitted basis in Mississippi and on a surplus lines basis in other states. The rating reflects Star Vantage's low underwriting leverage and significant surplus relative to projected premiums written. The rating also reflects a favorable market opportunity due to the company entering a market with (until recently) declining private market capacity. The management team has solid industry experience and expects to write highly customizable policies which it views as a competitive advantage. Additionally, as a start-up insurer, Star Vantage has no legacy liabilities. Star Vantage will have minimal start up expenses due to an organizational structure whereby the Attorney-in-Fact (AIF) will incur the majority of start-up costs. Balancing these strengths is the company's high financial leverage due to 91% of its surplus base consisting of a $15.5 million surplus note. Furthermore, as a property writer in the Southeast, the company 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 a de novo insurer, Star Vantage's future profitability is uncertain and dependent upon management executing its business plan.

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