On April 11th, AM Best upgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “bbb” and affirmed the Financial Strength Rating of B++ (Good) of Baton Rouge-based Stonetrust Commercial Insurance Company.
Mike Dileo, CEO of Stonetrust since 2017, expressed positivity regarding Best’s action in a conversation with Louisiana Comp Blog. “We’re really excited about this year’s evaluation,” Dileo said. “We’ve really worked hard to have a good working relationship with our analyst at AM Best so that they completely understand how we’re doing and our plans. That’s paid dividends for us as we continue our progression toward A rated status.
The ratings reflect Stonetrust’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM). The outlook remains stable.
As delineated in the report, the Issuer Credit Rating improvement is based on a variety of factors internal to Stonetrust’s operations. “We’ve been very consistent in our loss ratio over the last several years in a very challenging market, our capital structure is much stronger, our surplus to premium ratio is more than adequate, all of those things together were considered in Best’s decision to increase our credit rating,” Dileo explained.
Ratings are issued on approximately 3,500 companies in more than 90 countries worldwide.
Dileo noted that the company still has work to do to achieve an A rating. “Our next goal in that process is to have the outlook improved from B++ stable to B++ positive,” he said. “Now that we’ve achieved the first step of having our credit rating upgraded, we will focus on the next step in our progression, which is the Positive outlook. With our underwriting consistency, our strong capital position, our great staff and our dedicated agent partners, we’re doing all the things that Best requires to achieve A rated status very soon.”
Effective January 1st, 2018, Wintaai Holdings Ltd. acquired Stonetrust from Dhando Holdings. Wintaai Holdings Ltd. is a wholly owned subsidiary of Chou Associates Management Inc., a Toronto-based investment advisory firm that manages a series of mutual funds. Asked whether that move made an impact on this improvement, Dileo said that it “was viewed as very positive” and added that the working relationship with Chou and Wintaai has been extremely beneficial for the company and in communications with AM Best about Stonetrust’s investment strategy.
More information is available on AM Best’s recent rating activity page here.