22 February 2024news

AM Best assigns ratings to ReIsure Vermont

AM Best has assigned a financial strength rating of A- (Excellent) and a long-term issuer credit rating of “a-” (Excellent) to Relsure Vermont. The outlook assigned to these ratings is stable.

Relsure is a captive insurance company wholly owned by The Related Companies, a New York-based limited partnership engaged in acquiring, developing, owning, operating and selling real estate primarily throughout the United States.

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

According to AM Best: “Relsure’s level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR), is assessed at the strongest level, where AM Best expects it to remain in future years. The balance sheet strength assessment also considers the company’s conservative investment strategy, solid liquidity measures and favourable loss reserve development over the last five years.

“Relsure’s adequate operating performance assessment reflects favourable five-year average combined and operating ratios, as well as return on revenue measures that outperform AM Best’s commercial casualty composite. Relsure’s operating performance reflects the inherent benefits of being a captive insurer as it has minimal acquisition costs and administrative expenses, driving its favourable expense ratio. In addition, the parent’s risk management practices, which include best-in-class safety and loss control programs, play a key role in the captive’s loss experience, which has shown improvement in recent years.”

The rating agency also pointed out that Relsure provides general liability and workers’ compensation coverage through Related’s owner controlled insurance programs and property coverage. In addition, Relsure provides terrorism coverage for Related; however, this exposure is 100% reinsured with Terrorism Risk Insurance Program Reauthorization Act and a highly rated panel of reinsurance partners. Related was founded over 50 years ago, and currently has over $60 billion in assets owned or under development. Relsure is considered a core element of Related’s overall risk management and risk mitigation programs and plays a strategic role in delivering coverage and access to reinsurance for specific risks of its parent and affiliates.

The stable outlooks reflect AM Best's expectation that Relsure’s balance sheet strength will remain at a very strong level, underpinned by its strongest level of risk-adjusted capitalisation, while operating performance continues to stabilise. 

According to AM Best negative rating action could occur if risk-adjusted capitalisation materially weakens or there is a significant shift in its reinsurance structure that no longer supports the current balance sheet strength assessment. Negative rating action could also occur if underwriting performance weakens, which would reflect volatility in operating performance. Positive rating action could occur from sustainable improvement in underwriting performance, while organically growing surplus.

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