AM Best Confirms Constitution Insurance Company Credit Ratings – InsuranceNewsNet

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OLDWICK, NJ–(BUSINESS WIRE)–
AM Best affirmed the issuer’s financial strength rating of A- (Excellent) and the issuer’s long-term credit rating of “a-” (Excellent) from Constitution Insurance Company (Constitution) (Cambridge, NY). The outlook for these Credit Ratings (ratings) is stable.

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

Constitution is 100% owned by its CEO, steven menziesand participates in a workers’ compensation quota share reinsurance transaction with a commonly held insurer.

Constitution is well capitalized on a risk-adjusted basis at the end of 2021 and has no debt on its balance sheet. The company maintains a conservative investment portfolio comprised of approximately two-thirds cash and cash equivalents, with the balance comprised of high quality fixed income investments. Although this large cash position provides increased liquidity to the company, it has a negative impact on the total return of the portfolio.

The changing business profile of Constitution has caused volatility in performance measures over the past several years, but these have largely moved in a favorable direction as operations stabilize. This can be seen in the combined ratio, which increased from 211% in 2017 to 88.1% in 2021. Previous unfavorable combined ratios were mainly due to low premium volumes, as the company transitioned to its business plan current.

Constitution’s business profile maintains certain geographic and product concentrations, although the assumed quota-sharing contracts from a related party have alleviated concerns to some extent as they have increased diversification and improved overall performance.

Constitution’s ERM practices are tailored to its size and scope. Risk management is a central point for management and the company is well aware of the risks that affect its markets. The company maintains well-established conservative underwriting guidelines which have been profitable in the past.

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 relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limitations of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s Credit Scores, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Based at United Statesthe company does business in more than 100 countries with regional offices in London, amsterdam, dubai, hong kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Christopher PenningsCPCU

Financial Analyst

+1 908 439 2200 ext. 5611

[email protected]

Christopher Sharkey
Manager, Public Relations

+1 908 439 2200 ext. 5159

[email protected]

Steven ChiricoCPA

Director

+1 908 439 2200 ext. 5087

[email protected]

Al Slavin
Communications Specialist

+1 908 439 2200 ext. 5098

[email protected]

Source: AM Best

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