20 November 2014Cayman analysis

AM Best upgrades Caring Communities

Rating agency AM Best has upgraded the financial strength rating of Caring Communities, a Reciprocal Risk Retention Group (CCrRRG), and Caring Communities Insurance Company (CCIC) (Cayman Islands).

The agency upgraded its financial strength rating to A (Excellent) from A- (Excellent) and the issuer credit rating to “a” from “a-”. The outlook for all ratings has been revised to stable from positive.

AM Best said the rating actions reflect CCrRRG’s and CCIC’s excellent risk-adjusted capitalisation, good geographic spread of risk and consistently profitable operating results.

“Also, significant cash flows from underwriting and operations coupled with a prudently conservative investment portfolio have a positive influence on the ratings,” said the rating agency.

Partially offsetting these positive rating factors is CCrRRG and CCIC's reinsurance programme, which has historically resulted in moderately high reserve leverage associated with long-tail casualty lines of business.

“Because CCrRRG and CCIC's primary mission is to provide to their owner/policyholders stable coverage into the future, they have generated a net profit for all their years of existence. Their combined ratios have also outperformed peers by a significant margin. The investment portfolio involves a diverse mix of assets that results in a conservative portfolio to consistently yield a reasonable return,” added AM Best.