OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Palms Specialty Insurance Company, Inc. (Palms Specialty) (Delaware). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect Palms Specialty’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).
Palms Specialty is a newly formed specialty insurer focusing on the U.S. excess and surplus lines accounts, providing coverage for specialty property, professional lines and other specialty lines with manageable gross limits. The ratings reflect Palms Specialty’s strategic importance to its parent company.
The very strong balance sheet assessment is based on Palms Specialty’s supportive risk-adjusted capital that meets AM Best’s guidelines for newly formed organizations. AM Best expects that Palms Specialty will maintain supportive risk-adjusted capital levels throughout its start-up phase based on balance sheet projections provided by Palms Specialty’s management. AM Best assesses Palms Specialty’s operating performance as adequate based on its clearly defined business plan and income statement projections that contemplate a level of implementation and execution risk for a newly formed entity. AM Best views Palms Specialty’s business profile as limited, given the execution risk associated with a start-up entity and the degree of competition in its selected market. This risk is mitigated somewhat by the management team’s experience in the targeted business class, along with the parent company’s brand and track record of success. Palms Specialty is expected to benefit from the parent company’s established and tested ERM framework.
Negative rating action could occur if the company’s actual operating performance or balance sheet strength materially differ to the downside from the initial business plan.
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