KBRA Assigns Rating to Orange Insurance Exchange
14 Nov 2023 | New York
KBRA assigns a BBB Insurance Financial Strength Rating (IFSR) to Orange Insurance Exchange. The Outlook for the rating is Stable.
Orange Insurance Exchange ("Orange") is a new Florida domestic reciprocal property and casualty insurance company headquartered in Newberry, FL which will write primarily personal lines residential business as well as commercial lines habitational business solely in Florida. The rating reflects Orange'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 sector with declining private market capacity. Additionally, as a start-up insurer, Orange has no legacy liabilities. Orange will have manageable start-up expenses due to an organizational structure whereby the Attorney-in-Fact (AIF) will incur the majority of start-up costs. Further, KBRA views the company’s business plan as reasonable, with a management team that has considerable experience in the Florida homeowners’ insurance market. Balancing these strengths is the company’s high financial leverage due to its entire surplus base consisting of a $25 million surplus note. Furthermore, as a Florida homeowners’ writer, 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, Orange’s future profitability is uncertain and dependent upon management executing its business plan.
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