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Press release content from Business Wire. The AP news staff was not involved in its creation.

AM Best Downgrades Credit Ratings of American Surety Company

June 3, 2021 GMT

OLDWICK, N.J.--(BUSINESS WIRE)--Jun 3, 2021--

AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb+” (Good) from “a-” (Excellent) of American Surety Company (ASC) (Indianapolis, IN). The outlook of these Credit Ratings (ratings) has been revised to stable from negative.

The ratings reflect ASC’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management (ERM).

The downgrades reflect a change in assessment in operating performance to marginal from adequate, reflective of increased volatility in underwriting and operating performance in recent years with metrics trailing the fidelity and surety composite. The company has been challenged over the past several years due to regulatory and market pressures stemming from bail reform. Management has responded by working toward the development of an alternative surety bond program to diversify the book of business somewhat. Despite these initiatives, however, deterioration in performance continues and pressures the company’s ability to generate organic surplus growth through core operations.

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ASC’s balance sheet strength continues to be supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), partially offset by dividend payments and the aforementioned challenges to grow surplus through underwriting results. Additional rating pressure could occur should ASC fail to generate surplus growth, inclusive of dividend payments, adding pressure on the very strong assessment of balance sheet strength. The limited business profile reflects the company’s product line concentration, somewhat offset by management’s broad experience working in the bail bond industry. ERM is viewed as appropriate and will be monitored for proactive initiatives aimed at changes in the regulatory environment that may have an adverse impact on the company’s current and future business plans.

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This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com:https://www.businesswire.com/news/home/20210603005880/en/

CONTACT: Maurice Thomas

Senior Financial Analyst

+1 908 439 2200, ext. 5794

maurice.thomas@ambest.comMichelle Baurkot

Director

+1 908 439 2200, ext. 5314

michelle.baurkot@ambest.comChristopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.comJim Peavy

Director, Communications

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

KEYWORD: NEW JERSEY EUROPE UNITED STATES NORTH AMERICA

INDUSTRY KEYWORD: INSURANCE PROFESSIONAL SERVICES

SOURCE: AM Best

Copyright Business Wire 2021.

PUB: 06/03/2021 01:29 PM/DISC: 06/03/2021 01:29 PM

http://www.businesswire.com/news/home/20210603005880/en