AM Best Assigns Credit Ratings to Wingsail Insurance Company; Affirms Credit Ratings of Core Members of Spinnaker Insurance Group
AM Best has assigned a Financial Strength Rating (FSR) of A- (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of "a-" (Excellent) to Wingsail Insurance Company, a 100% reinsured subsidiary of Spinnaker Insurance Company. The outlook assigned to these Credit Ratings (ratings) is stable. Concurrently, AM Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of "a-" (Excellent) of Spinnaker Insurance Company and its 100% reinsured subsidiary, Spinnaker Specialty Insurance Company. The outlook of these ratings is stable. All companies are headquartered in Bedminster, NJ and collectively referred to as Spinnaker Insurance Group (Spinnaker).
The ratings reflect Spinnaker'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.
The stable outlooks reflect AM Best's expectation that Spinnaker's operating performance will remain profitable over the near term, and that its balance sheet strength will remain supportive of its current ratings level and planned premium growth.
Spinnaker's very strong balance sheet strength assessment is supported by the strongest levels of risk-adjusted capitalization as measured by Best's Credit Adequacy Ratio (BCAR). The balance sheet strength largely reflects capital contributions received from its publicly traded parent, Hippo Holdings Inc. (Hippo) (NYSE:HIPO), following its acquisition of Spinnaker in 2020. To a lesser extent, growth in surplus has been driven by retained earnings, that have improved in recent years. Spinnaker's balance sheet strength considers the conservative participation that the group maintains on select program business since most business is fronted, supported by a comprehensive reinsurance program comprised of high quality reinsurers. Spinnaker maintains a conservative investment portfolio comprised primarily of long-term bonds and short-term investment holdings. The ratings further reflect the financial flexibility and operational benefits afforded by Hippo. However, should Hippo's financial trends not improve as expected, Spinnaker's ratings could be impacted negatively.
Spinnaker maintains an adequate operating performance assessment. Despite variability in reported earnings over the recent five-year period, viewed over the long term, Spinnaker has reported solid pre-tax operating earnings, which have outperformed that of the personal property industry composite. Spinnaker's operating performance has been driven by generally profitable underwriting performance, augmented by investment income. Through September 30, 2024, Spinnaker reported $17.45 million in pre-tax operating earnings primarily driven by growth in non-Hippo programs, combined with stabilized margin on Hippo programs. Spinnaker's growth in pre-tax income over the long term has been achieved despite the impact of catastrophe losses, excess of loss reinsurance costs and ongoing investments in operations (people and infrastructure) to support future growth.
Spinnaker's limited business profile assessment reflects the group's conservative approach to writing business, whereby it generally cedes 80% to 100% of premiums on a program-by-program basis to quota share reinsurers. Business is sourced from Program Administrators and Managing General Agents with substantial reinsurance protection, primarily structured as fronting arrangements. Spinnaker focuses on short-tail, property catastrophe exposed programs, consisting of personal lines and main street commercial insurance. The group also writes short-tail specialty lines and other adjacent high margin programs.
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.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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