26 February 2016Actuarial & underwriting

AM Best affirms 'A' rating of The Kroger Co captives

AM Best has affirmed the financial strength of Queen City Assurance and Vine Court Assurance as ‘A’ (Excellent).

The ratings are based on Queen City and Vine Court’s individual and combined profiles as single-parent captives of The Kroger Co, the rating agency said.

The ratings also are based on both companies’ excellent risk-adjusted capitalisation, substantial net income and underwriting profitability, a growing capital base, conservative investments and a strong adherence to the parent’s robust risk controls and overall risk culture, according to AM best.

Additionally, the rating firm said return measures on a group and individual basis are consistently positive, reflective of the organisation’s prudent pricing and deployment of capital.

AM Best said these significant strengths are partially offset by the companies’ risk concentration, which is the result of being single-parent captives of The Kroger Co, coupled with a substantial aggregate limit retained by the captives. Nevertheless, AM Best recognises the importance and mission of the captives and the substantial financial resources and support available to them as part of The Kroger Co.

Key triggers that could result in a ratings upgrade, according to AM Best, include a consistently profitable operating performance coupled with a substantial increase in risk-adjusted capitalisation.

Key rating triggers that could result in a downgrade include a precipitous decline in the companies’ risk-adjusted capital strength. Either a rating enhancement or deterioration in the capitalization of the parent could result in an upgrade or a downgrade of the ratings of Queen City and Vine Court.