NU Online News Service, Jan. 16, 2:37 p.m. EST
A.M. Best has downgraded specialty insurer BancInsure Inc.'s B-plus-plus financial strength rating to B with a negative outlook due to "marked deterioration in BancInsure's operating performance after the initial impact of the recession and financial market downturn in 2008."
In the past three years, the Oklahoma City, Okla.-headquartered insurer has reported "unfavorable underwriting results" because of "adverse developments in the financial-institution industry, directors and officers liability and the non-financial-institution workers' compensation lines of business." All have contributed to large net losses in the past three years, Best notes.
Best also says BancInsure's surplus declined in 2011 by $10 million, or 28 percent, and reported a combined ratio of 122.6.
Best says it is concerned that the company will be "challenged to grow capital and surplus," which is why it issued the rating downgrade.
The ratings agency adds that it does not believe "positive rating actions" will develop "in the near term."
For its part, BancInsure, which provides insurance to banks and other financial institutions around the United States, responded to the downgrade, saying the company remains healthy.
"BancInsure's assets remain adequate to meet the company's obligations to policyholders, as reflected in BancInsure's financial statements and supported by the calculation of risk based capital prescribed by the [National Association of Insurance Commissioners]," says Mark Krienke, the carrier's vice president and chief financial officer in a statement.
Last month, BancInsure said it would begin issuing policies from KnightBrook Insurance Co. for its products including D&O, kidnap and ransom, excess deposit insurance, commercial package policy, and lenders single interest. KnightBrook is rated "A-minus (Excellent)" with stable outlook by A.M. Best.
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