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AM Best Revises Issuer Credit Rating Outlook to Positive for Prime Insurance Company

AM Best Revises Issuer Credit Rating Outlook to Positive for Prime Insurance Company

OLDWICK – NOVEMBER 02, 2021 11:07 AM (EDT)
AM Best has revised the outlook to positive from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a” (Excellent) of Prime Insurance Company (Prime) (Chicago, IL). The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect Prime’s balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

The Long-Term ICR outlook revision to positive recognizes Prime’s historically favorable operating results year over year and the expectation that Prime’s operating performance, especially underwriting results, will continue to outperform its peers in the surplus lines industry. The positive Long-Term ICR outlook also considers the continuation of Prime’s very strong balance sheet strength assessment level supported by a return to favorable loss reserve development, while maintaining its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR).

Prime’s strong operating performance far exceeds that of other surplus lines industry participants, which is attributable to its adherence to strict underwriting discipline, aggressive claims tactics and the ability to charge higher premiums and manuscript policy terms and coverages as an opportunistic insurer that does not compete on price. Five-year average loss ratios outperform the AM Best composite by approximately 20 percentage points. The company accesses quality business through its multitiered distribution capabilities to which it applies its sound underwriting and policy issuance practices and risk-adjusted pricing with restrictive terms and conditions. The company also has an in-house risk management team that partners with policyholders to control loss exposure and reduce incident severity, and an experienced in-house claims unit that vigorously defends and protects policyholder interests while seeking fair claims settlement. These practices have driven combined and operating ratios that readily outperform similarly assessed peers.

Some concerns exist with the level of growth reported by Prime in the most recent period. AM Best plans to monitor Prime’s rapid premium growth as the company seeks new business opportunities in the commercial auto liability sector – a market that has been severely challenged in recent years. Thus far, the company has been very successful in generating significant growth and profits from this dislocated market. Historical loss ratios appear relatively stable since the company entered the commercial auto market in 2013. The company incorporated several lessons learned from that time to improve and stabilize underwriting results further. Expenses remain very low relative to the industry, lending to its better-than- average results each year.

The rating affirmations reflect Prime’s strongest level of risk-adjusted capitalization that continues to support the aforementioned growth, with surplus growth driven by underwriting profitability, even with conservative reserving. Prime Holdings Insurance Services, Inc., the holding company, affords a moderate level of financial flexibility and the balance sheet is bolstered further by reinsurance and a quota share arrangement led by strong reinsurance partners, including RLI Insurance Company, which not only acts as a reinsurer, but as an equity partner-owner as well.

Prime has a neutral business profile as a predominant surplus lines insurer authorized to conduct business in all 50 states and as a licensed admitted insurer in states that require admitted paper. Enterprise risk management is appropriate for the company and is the tie that binds the enterprise together as a focused insurance company that leverages its surplus lines expertise to the benefit of the company and its policyholders in order to find solutions for its insureds and a partnership in claims management and resolution.

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 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.


rick lindseyAuthored by Rick J. Lindsey, CEO, President, and Chairman of Prime Insurance Company

Rick J. Lindsey hails from Salt Lake City, Utah. He began working in the mailroom of his father’s Salt Lake City insurance firm, getting his introduction to the business that became his lifelong career. Lindsey quickly rose through the ranks while working in nearly every imaginable insurance industry job. As an entrepreneur, specialty lines underwriter, claims specialist, risk manager, and a licensed surplus lines broker, Rick Lindsey is highly skilled in all levels of leadership and execution. As he progressed on his career path, Rick discovered an urgent need for insurers willing to write policies for high-risk individuals and businesses. He was frequently frustrated that he could not provide the liability protection these entities desperately needed to safeguard their assets. He also formed the belief that insurance companies acted too quickly to settle frivolous claims. Lindsey decided to try a different approach. He started an insurance company and became the newly formed entity’s CEO. This opportunity has enabled Rick to fill a void in the market and provide a valuable service to businesses, individuals, and insurance agents who write high-risk business. Prime Insurance also specializes in helping individuals and businesses who live a lifestyle or participate in activities that make them difficult for traditional carriers to insure. If you’ve been denied, non-renewed, or canceled coverage, don’t give up quite yet. Chances are Prime Insurance can help.

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