Guilderland Reinsurance receives ratings from AM Best

AM Best has assigned new ratings to Guilderland Reinsurance Company (GRC), based in New York.

The ratings agency awarded GRC a financial strength rating (FSR) of A- (Excellent) and a long-term issuer credit rating (Long-Term ICR) of “a-” (Excellent), with a stable outlook for both.

In addition, AM Best has reaffirmed the same ratings for several entities within the Knight group, including Knight Insurance Company based in the Cayman Islands, KnightBrook Insurance Company, and Knight Specialty Insurance Company, both located in Wilmington, DE. The outlook for these ratings remains stable.

These ratings for GRC reflect its integration into the Knight group and the support it receives through a quota share reinsurance agreement with Knight Insurance, the group’s lead company.

GRC plans to directly write an existing product named GAP, previously offered through another fronting insurer, focused in New York.

The collective ratings for the Knight entities are supported by the group’s strong balance sheet, described by AM Best as very strong, alongside adequate operating performance, a neutral business profile, and suitable enterprise risk management strategies. Knight’s financial strength is said to be underpinned by its risk-adjusted capitalization, which reaches the highest level according to Best’s Capital Adequacy Ratio (BCAR).

This strength is further supported by consistent organic surplus growth over the past five years and enhanced financial flexibility as part of the Hankey Group, which reported $23.4 billion in assets in 2023.

Additionally, Knight’s balance sheet also benefited from a loss portfolio transfer and adverse development cover executed in 2022, which effectively removed some legacy non-performing programs from its books. This move protects the balance sheet and future operating results from further adverse developments from prior years.

However, AM Best notes that these strengths are somewhat balanced by a very high common stock leverage, which aligns with the group’s long-term goals for capital gains but is mitigated by ample enterprise liquidity and financial flexibility, demonstrated by historically timely capital contributions when needed.

What are your thoughts on this story? Please feel free to share your comments below.