OLDWICK, N.J.–(BUSINESS WIRE)–#insurance—AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Emerald Bay Specialty Insurance Company (EBSIC) (Tucson, AZ). The outlook assigned to these Credit Ratings (ratings) is stable.
The ratings reflect EBSIC’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).
EBSIC is an Arizona-domiciled hybrid fronting company operating in the surplus lines market throughout the United States. As such, the company’s strategy involves maintaining a significant risk position in the programs it writes. EBSIC’s ultimate parent is Emerald Bay Risk Solutions, LLC (Emerald Bay) and Emerald Bay will be owned primarily by Bain Capital Insurance (BCI).
EBSIC’s balance sheet strength assessment is driven by the company’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to be in the strongest range throughout the company’s initial five-year business plan. The balance sheet strength is underpinned further by a conservative investment profile and the backing of BCI. BCI has committed significant equity into the company to support the start-up operations and has assisted EBSIC’s ultimate parent, Emerald Bay, in sourcing a term loan credit facility as part of the initial funding of EBSIC.
AM Best assesses EBSIC’s operating performance as adequate as the company’s underwriting guidelines are anticipated to produce profitable operating results over the intermediate term. Additionally, the company’s initial portfolio will include third-party programs where management has developed deep expertise through previous collaborations. AM Best assesses EBSIC’s business profile as limited given the start-up nature of the company’s operations. However, AM Best notes that management has a strong track record of operating in the insurance and fronting markets, which reduces execution risk. AM Best assesses EBSIC’s ERM framework as appropriate with clear strategic objectives well aligned with the company’s risk appetite. Moreover, there is a robust risk monitoring and governance structure in place to ensure accountability and oversight throughout the organization.
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