3 June 2024news

AM Best affirms Prism ratings

AM Best has affirmed the financial strength rating of A- and the long-term issuer credit rating of “a-” of Prism Assurance, which is based in Burlington, Vermont. 

The outlook of these ratings is stable.

AM Best said that the ratings reflect Prism’s balance sheet strength, which it assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

Prism’s balance sheet strength assessment of very strong is supported by risk-adjusted capitalisation at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Further, the company has strong liquidity measures, and affords financial flexibility through the support from its parent company, Apogee Enterprises. The adequate operating performance assessment reflects Prism’s five-year average operating ratio that compares suitably with AM Best’s workers’ compensation composite, despite intermittent volatility. The company continues to generate consistent annual net profits primarily from a steady flow of royalty and investment income, which adequately offsets any volatility in underwriting and generally allows for healthy profits each year. Prism’s operations also benefit from its inherent low expense structure as a captive, driving an underwriting expense ratio that is a fraction of its peers’ average in comparison.

Prism is the single-parent captive insurance company of Apogee, one of the largest architectural design and construction companies in the United States. AM Best assesses Prism’s business profile as limited as the company provides very specific lines of coverage to Apogee, although its risks do have a level of geographical diversification reflecting the scope of the parent’s operations. As a captive, Prism is an integral component of Apogee’s overall organisation’s risk management capability and awareness. The company is interwoven into Apogee’s ERM program, and as a result, Prism displays excellent risk identification and mitigation processes. Prism works cohesively with business units across the overall organisation to reduce claims severity and frequency.

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