KBRA Downgrades and Subsequently Withdraws Rating for Interboro Insurance Company
1 Apr 2025 | New York
KBRA downgrades the insurance financial strength rating (IFSR) for Interboro Insurance Company ("IIC") from BBB+ to BBB. The Outlook remains Developing. The downgrade reflects the continuation of the decline in policyholder surplus and RBC in 2024, driven by further underwriting losses. Policyholder surplus has declined 45% in the last five years from $38.4 million in 2019 to $21 million in 2024. RBC of 461% at year-end 2024, while still considered adequate, has declined in each of the last four years from a high of 935% in 2020. Overall, the company's underwriting results and surplus level have deteriorated relative to benchmarks.
On April 1, 2025, American Coastal Insurance Corporation (Nasdaq Ticker: ACIC) (KBRA: BB+/Stable) announced that it has completed the previously announced sale of IIC to Forza Insurance Holdings, LLC. ("Forza"). The Developing Outlook reflects the uncertainty regarding Forza's future strategic and capital plan for IIC. Subsequently KBRA withdraws the IFSR as the sale to Forza has closed.
Key Credit Considerations
The rating reflect IIC's adequate, but declining risk adjusted capitalization and conservative investment portfolio. Offsetting these strengths are the company's unfavorable underwriting results, exposure to event risk, and geographic risk concentration.
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