Press Release|Insurance

KBRA Places the Ratings of Clear Blue Financial Group, LLC and Subsidiaries on Watch Developing

4 Aug 2023   |   New York


KBRA places on Watch Developing the BBB- issuer rating for Clear Blue Financial Holdings, LLC, the BBB- debt rating on the $65 Million 5.375% senior unsecured notes due 2028, and the A- insurance financial strength ratings (IFSR) of Clear Blue Specialty Insurance Company, Clear Blue Insurance Company, Rock Ridge Insurance Company, and Highlander Specialty Insurance Company.

Recent events involving insurance intermediary Vesttoo and disputed letters of credit (LOC) in the name of China Construction Bank have raised distinct financial and business model risks for Clear Blue. KBRA notes that Clear Blue currently holds sufficient cash from paid premiums to cover all ceded reserves and that the Clear Blue management team is quickly and aggressively moving to implement solutions to address the Vesttoo-related LOC issues. However, the full cost of these solutions remains uncertain and thus has uncertain implications for the current and projected financial results and position of the company in the near term. The Watch Developing status reflects (i) the execution risks associated with the solutions currently under consideration, (ii) the uncertain financial/economic costs to address the Vesttoo-related challenges, and (iii) the risk of potential reputational impact on the company’s market position.

A Watch Developing Status is typically resolved within 90 days but will depend on Clear Blue’s achieving sufficient resolution of Vesttoo-related challenges with a manageable impact on the company’s financial results, reputation and market position.

To access rating and relevant documents, click here.


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