The ratings reflect both companies’ low underwriting leverage and conservative investment portfolios that are fully held in cash and cash equivalents. Additionally, as recently formed start-up insurers, Star Vantage and Apex Star have no legacy liabilities.
Balancing these strengths are the companies’ high financial leverage due to over 100% of Apex Star’s surplus base and nearly 100% of Star Vantage’s surplus base consisting of surplus notes. While both companies are targeting growth in the Florida property market that has benefited from legislative reforms, they face increased competition that has put pressure on rates. As a result, there is execution risk around both companies achieving their latest premium growth targets. Furthermore, as property writers in the Southeast, both companies have product and geographic concentration, natural catastrophe exposure due to hurricanes and high reinsurance dependence that, depending on availability and affordability, could…
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