OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has placed under review with negative implications the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of Best Meridian Insurance Company (BMIC) (Miami, FL) and Best Meridian International Insurance Company (BMIIC) (Grand Cayman, Cayman Islands).
This Credit Rating (rating) action follows BMIC’s first-quarter 2021 and year-end 2020 results, which reported deterioration in its directly issued mortgage holdings. While the organization has a successful history of profitable returns on its mortgage portfolio, the properties are concentrated in Florida, which experienced significant economic downturn during 2020 due to the COVID-19 outbreak. In addition, while BMIIC has contractual measures in place to reduce the risk of disputes and nonperformance of counterparties, AM Best remains concerned over the increasing reinsurance recoverables, including much higher balances from unrated counterparties at BMIIC associated with its relatively new property and casualty reinsurance business. Based on these aspects, there is a potential for deterioration of the year-end 2020 consolidated Best’s Capital Adequacy Ratio score to a level no longer supportive of the current balance sheet strength assessment. The ratings will remain under review pending BMIIC’s filing of its GAAP audited financial statements for year-end 2020, AM Best’s further discussions with management regarding those financial results and through 2021 as well as the expected growth of the company’s property and casualty reinsurance business.
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