AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Utica First Insurance Company (Utica First) (Oriskany, NY).
The Credit Ratings (ratings) reflect Utica First’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
The revised outlooks reflect continued deterioration of operating performance as underwriting losses have been mounting since 2020. Utica First experienced their largest underwriting loss to date in 2022, mainly driven by weather losses in core states of operation and exacerbated by macroeconomic trends. Inflationary pressures have also increased the severity of claims driving up loss costs considerably. Consequently, the company’s combined ratio has been above breakeven for three consecutive years and four of the last five years. Finally, significant unrealized losses were reported in 2022 due to market volatility, which coupled with underwriting losses generated a surplus decline of nearly 10%.
Utica First’s management has implemented profitability initiatives to help mitigate volatility, which includes increasing inflation guard charges, significant rate increases on all lines of business and reducing policy credits where permissible. The company continues to refine their underwriting standards and non-renew unprofitable business segments including Connecticut homeowners’ policies.
AM Best expects that these actions will help Utica First improve upon its current level of performance; however, given the absence of improvement, the ratings are likely to be downgraded.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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