Delaware captive rating downgraded then withdrawn

Delaware domiciled United Contractors’ Insurance Company was downgraded by A.M. Best, their financial strength rating falling to C- and issuer credit rating to “cc”, before the rating agency withdrew the ratings at the request of the company’s management.

The ratings were based on UCIC’s “rapid decline in policyholder surplus”, caused by several large losses over two years and continuing escalating adverse development. The “precipitous decline” of policyholder surplus, which peaked in 2009 at $16.2 million but was $8.9 million by year-end 2012, has led to what A.M. Best called “weak risk-adjusted capital as losses and adverse development continue to climb”.

In addition, the rating agency cited the elevated turnover of third-party administrators for claims mover the past three years.