am the best has changed the outlook from stable to negative and upgraded the Financial Strength Rating from A- (Excellent) and Long-Term Issuer Credit Rating to “a-” (Excellent) of the operating entities of Trisura Group Ltd. (Trisura) confirmed. [TSX:TSU] (Toronto, Ontario, Canada), which includes Trisura Specialty Insurance Company (TSIC), Trisura Insurance Company (TIC), Bricktown Specialty Insurance Company (BSIC) and Trisura Guarantee Insurance Company (TGIC). TSIC, TIC and BSIC are based in Oklahoma City, Oklahoma while TGIC is based in Toronto, Ontario, Canada.
The credit ratings reflect Trisura’s overall balance sheet strength, which AM Best considers very strong, the company’s reasonable operating performance, neutral business profile and risk management.
The negative outlook reflects required improvements in Trisura’s operational risk management processes surrounding the management of captives in its US operations. While Trisura is actively addressing these issues from a political, organizational and corporate governance perspective, AM Best cautions that the effectiveness of these actions will take time to assess.
The change in outlook to negative from stable follows a one-time write-down of reinsurance receivables of CA$81.5 million in the fourth quarter of 2022, which significantly offset consolidated net income despite the company having a profitable year. This write-off relates to a reinsurance receivable related to a fronting program for a US property/casualty reinsurance captive program. The write-off was necessitated by the lack of sufficient collateral to cover the recoverable amount as higher catastrophe reinsurance costs required by Trisura to manage catastrophe risk depleted the program’s collateral. Following the write-off, the program has been accelerated and the Company continues to implement improved policies, procedures and organizational changes to the Group’s corporate governance practices.
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