AM Best Revises Outlooks to Negative for Arrow Mutual Liability Insurance Company
May 15 2024 - 11:12AM
Business Wire
AM Best has revised the outlooks to negative from stable
and affirmed the Financial Strength Rating of A- (Excellent) and
the Long-Term Issuer Credit Rating of “a-” (Excellent) of Arrow
Mutual Liability Insurance Company (Arrow) (Chestnut Hill, MA).
The Credit Ratings (ratings) reflect Arrow’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).
The revision of the outlooks to negative from stable reflects AM
Best’s concern with the Arrow’s downward trend in operating
performance over the recent term. This trend, which also has put
pressure on the company’s surplus, is driven by a large claim
dispute with a reinsurer, as well as elevated expenses. The company
is implementing mitigating measures and fully reflected the
anticipated cost of the disputed claim in its 2023 annual
statement.
Arrow’s balance sheet strength assessment is supported by its
strongest level risk-adjusted capitalization, as measured by Best’s
Capital Adequacy Ratio (BCAR), at year-end 2023, and liquidity
metrics that compare favorably with the industry. Arrow’s BCAR has
remained at the strongest level despite the surplus decline in
recent years.
The limited business profile assessment reflects Arrow’s small
customer base, high concentration of clients in its home state of
Massachusetts, as well as potential regulatory risks from said
concentration.
Arrow’s ERM assessment remains adequate given the company’s
small size and the scale at which it operates. Due to the limited
number of employees, Arrow works with a number of third parties to
round out its operations.
This press release relates to Credit Ratings that have been
published on AM Best’s website. For all rating information relating
to the release and pertinent disclosures, including details of the
office responsible for issuing each of the individual ratings
referenced in this release, please see AM Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please
view Guide to Best's Credit Ratings. For information
on the proper use of Best’s Credit Ratings, Best’s Performance
Assessments, Best’s Preliminary Credit Assessments and AM Best
press releases, please view Guide to Proper Use of Best’s
Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and
data analytics provider specializing in the insurance industry.
Headquartered in the United States, the company does business in
over 100 countries with regional offices in London, Amsterdam,
Dubai, Hong Kong, Singapore and Mexico City. For more information,
visit www.ambest.com.
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Thomas Keelan Financial Analyst +1 908 882 1925
thomas.keelan@ambest.com
Christopher Sharkey Associate Director, Public
Relations +1 908 882 2310
christopher.sharkey@ambest.com
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908 882 2318 al.slavin@ambest.com