Quasar Insurance issuer credit rating upgraded by AM Best

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Quasar Insurance credit rating upgrade

Highlights

AM Best upgraded Quasar Insurance Company’s Long-Term Issuer Credit Rating to 'bbb+' from 'bbb' and affirmed its B++ Financial Strength Rating, both with stable outlooks.
The credit rating upgrade reflects improved balance sheet fundamentals, strong organic surplus growth, favorable BCAR-based risk-adjusted capitalization, low leverage, and high-quality capital and assets.
Quasar’s exposure remains concentrated in Louisiana and neighboring states, but AM Best expects continued very strong balance sheet strength and sustainable operating performance aligned with DSLD Homes’ risk management needs.

Capital position and rating rationale

As reported by AM Best, Quasar Insurance Company’s Long-Term Issuer Credit Rating is upgraded to “bbb+” from “bbb”, while its Financial Strength Rating of B++ is affirmed, with both ratings carrying a stable outlook.

AM Best says the ratings reflect Quasar’s very strong balance sheet strength, adequate operating performance, limited business profile and appropriate enterprise risk management. The agency says the issuer credit rating upgrade is driven by improved balance sheet strength fundamentals, supported by organic surplus growth and favorable risk-adjusted capitalization as measured by Best’s Capital Adequacy Ratio, or BCAR.

It also says supplemental insurance purchased at the affiliated insured is expected to partly offset high limits relative to Quasar’s surplus level. In addition, the company continues to maintain high-quality capital and assets, low leverage metrics and appropriate liquidity.

Exposure concentration and outlook implications

AM Best assesses Quasar’s operating performance as adequate, citing solid underwriting and operating metrics in each of the past five years. The agency says earnings capacity continues to be shaped by the needs of affiliated entity DSLD Homes.

Quasar’s business profile remains limited mainly because of concentrated risk exposure in Louisiana and neighboring states, along with the heavy weighting of premium from general liability policies. AM Best adds that the insurer’s enterprise risk management practices are appropriate because management remains closely focused on the risk tolerance and appetite tied to affiliated risk.

The stable outlook reflects AM Best’s expectation that Quasar will maintain its very strong balance sheet strength assessment and the strongest level of risk-adjusted capitalization measured by BCAR in support of its business plan. The agency also expects operating performance to remain sustainable with modest volatility and stay in line with projections as Quasar continues its strategic role within DSLD’s enterprise risk management framework.

AM Best’s affirmation of Motors Insurance Company Limited’s A- financial strength rating and “a-” long-term issuer credit rating underscored a very strong balance sheet, strong operating performance and stable outlook. Our earlier coverage noted that the insurer’s risk-adjusted capitalization remains at the strongest level under BCAR, supported by prudent reserving and a low-risk investment portfolio, even as capital buffers may ease moderately due to ongoing dividend payouts to its group.

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