AM Best has assigned a Financial Strength Rating of B+ (Good) and a Long-Term Issuer Credit Rating of “bbb-” (Good) to Keswick Guaranty, Inc. (Keswick) (U.S. Virgin Islands). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Keswick’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The balance sheet strength assessment reflects Keswick’s strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which has been supported by favorable net underwriting leverage, strong liquidity measures, favorable loss and loss adjustment expense (LAE) reserve development, an appropriate reinsurance program, and with the exception of 2022, consistent policyholder surplus growth. However, the company has limited financial flexibility and scale of operations.

The adequate operating performance assessment reflects Keswick’s profitable results over the latest five-year period generated from steady net investment income that offset underwriting losses. Despite Keswick’s favorable pure loss and LAE ratio compared with the commercial auto composite, its combined ratio lags the composite due to elevated underwriting expenses from the ramp up of a new line of business, private passenger auto. Recent results are less favorable than earlier years as the company is navigating through a more standard auto product that it began offering in 2020.

The company’s limited business profile assessment is driven by Keswick’s focus on two complementary lines of business – commercial auto and private passenger auto, and geographic concentration in the U.S. Virgin Islands, which subject it to judicial, regulatory and hurricane risks. AM Best views Keswick’s ERM program as appropriate for its overall size and risk profile. The stable outlooks reflect AM Best’s expectations that Keswick will execute on its business plan successfully and maintain adequate balance sheet metrics thorough profitable operating results during the growth initiative. Additionally, AM Best expects that Keswick’s risk management program will continue evolving with its business initiatives, and that it will continue to expand its claims and operations personnel in support of its business growth strategy and projections.

Negative rating action may occur if Keswick’s risk-adjusted capitalization materially declines for any reason or if operating performance deteriorates over the intermediate term. If this were to occur, it could bring into question the effectiveness of the company’s ERM program, which also could result in pressure on the company’s ERM building block assessment. Positive rating action may occur following sustained profitable operating performance, significantly contributing to surplus growth and risk-adjusted capitalization.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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