AM Best changes Peachtree Casualty Insurance outlook to "negative"

12 October 2010 - AM Best has revised to "negative" from "stable" the outlook on the B++ (good) financial strength rating and "bbb" issuer credit rating of US Peachtree Casualty Insurance Co.

The affirmation of the ratings reflects Peachtree's adequate risk-adjusted capitalisation, its long-time experience in the Florida non-standard auto marketplace and conservative investment portfolio with consistent investment income, the agency said.

In addition, the company continues to refine its underwriting criteria and implement rate increases.

These positive factors are somewhat offset by Peachtree's unprofitable underwriting performance in recent years, although underwriting trends have shown improvement in 2010, AM Best said.

As a result, a substantial downward trend in risk-adjusted capitalisation has occurred in recent periods, in conjunction with elevated underwriting leverage ratios.

The "negative" outlook recognises a significant growth in premium volume in 2010, putting further pressure on the company's risk-adjusted capitalisation, with uncertainty and potential execution risk associated with producing profitable return measures, the rater added.