A.M. Best Co. has assigned a financial strength rating of B
(Fair) and an issuer credit rating of “bb” to Weston Insurance Company
(Weston) (Tallahassee, FL). The outlook assigned to both ratings
The assigned ratings of Weston reflect its start-up status as a Florida
wind-only writer of both personal and commercial property lines of
business and corresponding risk concentration. In addition, the ratings
recognize the company’s high dependence on reinsurance, resulting in
elevated credit risk exposure. Given the structure of Weston's initial
take-out of policies from Citizens Property Insurance Corporation,
during its initial five months of operation, 100% of the business
written will be reinsured via a quota-share agreement. While
subsequently Weston will migrate toward an extensive catastrophe
reinsurance program, overall reinsurance dependence is expected to
remain elevated in future years given the company’s considerable
exposure to potential catastrophic events in its operating territory. In
addition, Weston faces certain execution risks, including the
effectiveness of its highly automated underwriting selection process,
the future availability and affordability of its planned reinsurance
program and the implementation of adequate rate levels for the exposures
Partially offsetting these negative rating factors are Weston's
underwriting guidelines that target a specific market and its
sophisticated rating segmentation process. In addition, the allocation
of the company's invested assets is highly conservative, which reduces
its investment risk. Furthermore, the company's current and projected
risk-adjusted capitalization is adequate for its current rating level.
Negative rating actions would occur if Weston’s planned financial
results materially deviate from its projections, the reinsurance
protection outlined does not materialize and/or the risk-adjusted
capitalization were to decline below an acceptable level required by
A.M. Best. In addition, material changes in the capital structure or
management of the company also could result in negative rating actions.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include:
“Catastrophe Analysis in A.M. Ratings” and “Equity Credit for Hybrid
Securities.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most
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