AM Best has revised the outlook to stable from negative for the Long-Term Issuer Credit Ratings (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of B++ (Good) and the Long-Term ICR of "bbb+" of Knight Insurance Company Ltd. (Knight Insurance) (Cayman Islands), KnightBrook Insurance Company (KnightBrook) (Wilmington, DE) and Knight Specialty Insurance Company (Wilmington, DE). The outlook of the FSR is stable. These companies collectively are referred to as Knight.
These Credit Ratings (ratings) reflect Knight’s balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The Long-Term ICR outlook revision reflects Knight’s operating and process enhancements instituted by its management team four years ago, which have resulted in steadily improving operating performance, most prominently in 2019 and through November 2020, and significantly reduced adverse prior year loss reserve development. The company has strengthened the monitoring and control of its general agent partners and third party adjusters in claims settling and enhanced its underwriting guidelines, which have contributed to the turnaround. While operating performance has shown improvement, the potential for volatility remains as open claims from terminated programs are settled and active programs mature. Volatility may also result from elevated common stock leverage relative to the industry.
The ratings also reflect Knight’s improving risk-adjusted capitalization and the strategic role that it has as a member of the Hankey Group, a group of companies that operates primarily in the automotive industry. Knight Insurance provides various lines of coverage for affiliated and unaffiliated programs. Its largest lines of business are commercial auto and general liability.
AM Best expects Knight to maintain its balance sheet strength at the very strong level and to continue refining its business model, while reducing earnings volatility.
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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