AM Best upgrades FSR of Keystone National to A-
AM Best has upgraded the financial strength rating (FSR) to A+ (Superior) from A- (Excellent) of insurance group Keystone National Insurance Company .
Concurrently, AM Best has affirmed the FSR of A+ (Superior) of Keystone National’s subsidiary, Tuscarora Wayne Insurance Company. Both companies are domiciled in Wyalusing, Pennsylvania. The outlook for all ratings remains stable.
The ratings upgrade of Keystone National reflects the company’s excellent risk-adjusted capitalisation that has been attained through several years of improved operating results, according to the rating firm.
The results and ratings are also highly reflective of the integration of the company into Tuscarora Wayne’s operations, which remain under the direction of the same management team.
The strong underwriting performance has been evident by above-average five-year combined ratios that outperform the commercial property composite, said AM Best. In addition, in said the ratings recognise management’s extensive knowledge of its market niche.
“There are significant benefits derived from its majority owner, Tuscarora Wayne, which bring economies of scale and explicit and implicit support, which includes capital contributions and internal quota-share reinsurance,” said AM Best.
“The ratings further reflect the company’s business plan that is based on the alignment of strategies and underwriting knowledge of Tuscarora Wayne.”
Partially offsetting these positive rating factors is the company’s geographic risk concentration in Pennsylvania. More than 75 percent of business is written in the state, which exposes its surplus to significant weather-related losses and competitive market conditions, said the rating firm. In addition, the company maintains an elevated expense position as compared with the commercial property composite.
Negative rating action could potentially occur in future rating cycles if frequent and severe weather events impact the company's profitability, the relationship with Tuscarora Wayne changes or if other market disruptions cause underwriting losses with substantial negative impact on risk adjusted capitalisation.
