AM Best affirms Concert ratings

AM Best has affirmed the financial strength rating of A- and the long-term issuer credit rating of “a-”  of Concert Specialty Insurance Company (CSIC) and its wholly owned subsidiary, Concert Insurance Company (CIC).

The outlook of these ratings is stable. Collectively, these companies operate under an intercompany pooling agreement and are referred to as Concert Insurance Group (Concert).
The ratings reflect Concert’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).

AM Best said that the ratings consider Concert’s strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio, which on a current and projected basis, is supportive of growth initiatives over the next several years. As a relatively new fronting organisation, AM Best expects Concert to have high levels of third-party reinsurance and gross and ceded premium leverage, as well as high amounts of funds held, letters of credit and trusts to offset the credit risks. Therefore, across the first few years of executing on its business plan, Concert’s leverage ratios and reinsurance recoverable/surplus levels will be actively monitored to ensure they are appropriate for the group’s risk profile.

Concert’s operating performance assessment of adequate is based on management’s business plan and projections that are closely aligned with its overall strategy. AM Best anticipates that Concert’s operating earnings will scale as the group’s premium base expands over the next several years, consisting of a mix of fronting fees and investment income. Concert’s business profile, which is limited, is expected to broaden over time as the group expands its footprint. The ratings agency based its ‘appropriate ERM’  assessment on Concert being directed and governed by leadership that has established a risk framework, risk appetite and risk tolerances.

AM Best added that it will closely monitor Concert’s results relative to its business plans to ensure any deviations remain within the scope of the current rating assessments.