Best downgrades AmTrust
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Rating agency A.M. Best Co. Inc. downgraded AmTrust Group insurers to A- from A on Tuesday, citing concerns over adverse reserve development.
AmTrust, which has a significant book of workers compensation business, bought adverse development coverage last year, but it was quickly exhausted.
In a statement announcing the downgrade, Oldwick, New Jersey-based Best said, “Any future adverse development of reserves as of March 31, 2017, that is not subject to other reinsurance agreements will be borne by the group. Through year-end 2017, adverse reserve development was particularly noticeable in the 2010 through 2014 accident years.”
Best also said a deterioration in AmTrust’s underwriting results and “increased variability of performance in recent years” contributed to the decision to downgrade the New York-based insurer.
A- is Best’s lowest rating in its category of insurers with “an excellent ability” to meet their obligations.
In a statement on Tuesday reacting to the downgrade, Barry Zyskind, chairman and CEO of AmTrust, which is currently being privatized, said the completion of Best’s rating review will allow the insurer to “move forward with certainty and confidence,” and the insurer’s owners and private equity partner Stone Point Capital L.L.C. remain “fully committed to our proposed transaction.”
The proposed privatization has been opposed by some investors, including Carl Icahn, who subsequently agreed to an improved price for AmTrust shares.
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