Transverse Insurance Group secures AM Best ratings

AM Best has assigned a financial strength rating (FSR) of A- (Excellent) to Transverse Specialty Insurance Company and a stable ratings outlook.

The ratings reflect Transverse Insurance Group’s balance sheet strength, which AM Best categorises as "very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM)".

According to the agency, the balance sheet assessment of very strong is based on initial financing capacity that meets its guidelines for newly formed companies and provides supportive risk-adjusted capital levels through a five-year startup period. Expected capital levels are measured against reinsurance recoverable amounts, including credit risk and reinsurance dependence factors.

AM Best assesses Transverse Insurance Group’s operating performance as adequate based on the group’s "clearly defined business plan that contemplates a level of implementation and execution risk for a newly formed entity".

It views the group’s business profile as limited, as it will serve as a hybrid fronting/transformer carrier, and will require a period to establish its brand and market position. A clearly defined ERM structure includes risk appetite and tolerance statements that focus on concerns specific with the business profile. Risk management benefits from an experienced management team cognizant of the key elements in their chosen niche.

The rating agency noted that negative rating actions could occur with declines in risk-adjusted capital, actual results falling adversely outside the initial projections, the enterprise being unable to gain traction within the parameters of its business profile, or risk appetite and tolerance levels proving to be inadequate for the organisation's profile.