KBRA Affirms IFSRs for Safepoint Insurance Company, Manatee Insurance Exchange, and Cajun Underwriters Reciprocal Exchange
3 Jul 2024 | New York
KBRA affirms the BBB+ Insurance Financial Strength Rating (IFSR) for Safepoint Insurance Company (SPI) and the BBB IFSRs for Manatee Insurance Exchange (Manatee) and Cajun Underwriters Reciprocal Exchange (Cajun). The Outlook for all ratings is Stable.
The ratings reflect the conservative reserving practices, adequate risk-based capitalization levels, experienced management team and high credit quality investment portfolios. Balancing these strengths are exposure to event risk, heavy reliance on reinsurance and geographic and product concentration.
Additionally, the ratings for Cajun and Manatee reflect low underwriting leverage and significant surplus relative to projected premiums written, the absence of legacy liabilities, strong risk-based capitalization at Cajun and manageable start-up expenses at Manatee due to the existing infrastructure being leveraged to keep start-up costs minimal. These positive factors are partially offset by high financial leverage at both companies due to the high concentration of surplus notes in their surplus bases.
Factors that could positively impact SPI's rating include consistent net underwriting gains contributing to organic surplus growth, profitable expansion to other states outside of Florida to better diversify earnings, and favorable change in risk profile. Factors that could negatively impact the rating include material deterioration in risk-adjusted capitalization and underwriting leverage, natural catastrophe events negatively impacting the balance sheet, inability to obtain reinsurance on acceptable terms and pricing, causing an increase in loss exposure, a reduction in the ability to underwrite policies, or a drag on earnings, unfavorable change in risk profile, and sustained material adverse reserve development.
Factors that could positively impact the ratings for Cajun and Manatee include execution of their business plans above what was provided to KBRA including faster reduction of financial leverage, organic surplus growth, improved financial flexibility and access to capital, and favorable change in risk profile. Factors that could negatively impact the ratings include material negative variance to business plan provided to KBRA, significant weather events that materially impact earnings and capital, inability to obtain reinsurance on acceptable terms and pricing, causing an increase in loss exposure, a reduction in the ability to underwrite policies, or a drag on earnings, unfavorable change in risk profile, and departure of key members of the management teams.
SPI is a Florida domiciled property and casualty insurance company headquartered in Temple Terrace, FL which commenced writing policies in 2013. SPI writes primarily homeowners multi-peril business and allied lines in coastal regions in Florida, Louisiana, and Texas. The company also writes small amounts of fire and commercial multi-peril business. Cajun is a Louisiana domiciled property and casualty insurance company headquartered in Metairie, LA which commenced business in 2022. Cajun writes admitted lines of business, primarily homeowners multi-peril and allied lines and writes solely in Louisiana, primarily in the Southeast region of the state. Manatee Insurance Exchange is a new reciprocal property and casualty insurance company headquartered in Temple Terrace, FL which writes primarily homeowners multi-peril business and small amounts of fire and commercial multi-peril solely in Florida. Manatee was formed by the management team of SPI with the expectation that SPI’s Florida business will renew on Manatee policies. Additionally, Manatee will offer voluntary personal and commercial lines policies with similar underwriting strategies as SPI.
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