28 April 2023Analysis

AM Best affirms ratings of Prism Assurance

AM Best has affirmed the financial strength rating of A- and the long-term issuer credit rating of “a-” of Vermont-based Prism Assurance. The outlook of these credit ratings is stable.

The rating agency said that the ratings reflect Prism’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 (ERM).

Prism’s balance sheet strength is assessed as very strong and is supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio, strong liquidity and its afforded financial flexibility and support from its parent company, Apogee Enterprises. The company’s operating performance reflects consistent annual net profits and a low-cost expense structure that has led to an underwriting expense ratio that is a fraction of its peers’ average in comparison. The company’s operating income is largely the result of a steady flow of royalty and investment income, which adequately offsets any volatility in underwriting and generally allows for healthy profits each year.

Prism is a single parent captive insurance company of Apogee, a large architectural design and construction companies in the US. The business profile is limited as the captive provides very specific lines of coverage to Apogee, although the captive’s risks do have a level of geographical diversification due to the scope of its parent’s operations.

AM Best said that: “The company is interwoven into Apogee’s ERM program, and as a result, Prism displays excellent risk identification and mitigation processes. As a captive, Prism is an integral component of Apogee’s overall organization’s risk management capability and awareness. Prism works cohesively with business units across the overall organization to reduce claims severity and frequency.”