Saturday, June 15, 2024

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AM Best affirms financial strength rating of Apogee captive

AM Best has affirmed the financial strength rating of A- (excellent) and the long-term issuer credit rating of “a-” (excellent) of Vermont-domiciled Prism Assurance. The outlook for the ratings is stable.

Prism is the single parent captive owned by Apogee, one of the largest architectural design and construction companies in the United States.

AM Best assesses Prism’s business profile as limited as the company provides very specific lines of coverage to Apogee, although its risks do have a level of geographical diversification reflecting the scope of the parent’s operations.

AM Best said the company is interwoven into Apogee’s enterprise risk management programme and, as a result, the captive displays excellent risk identification and mitigation processes.

Prism works cohesively with business units across the overall organisation to reduce claims severity and frequency.

The ratings reflect Prism’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

Prism’s balance sheet strength assessment of very strong is supported by risk-adjusted capitalisation at the strongest level, as measured by Best’s capital adequacy ratio (BCAR).

The company also has strong liquidity measures and affords financial flexibility through the support from its parent.

The adequate operating performance assessment reflects Prism’s five-year average operating ratio that compares suitably with AM Best’s workers’ compensation composite, despite intermittent volatility.

The captive continues to generate consistent annual net profits primarily from a steady flow of royalty and investment income, which adequately offsets any volatility in underwriting and generally allows for healthy profits each year.

AM Best said Prism’s operations also benefit from its inherent low expense structure as a captive, driving an underwriting expense ratio that is a fraction of its peers’ average in comparison.