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OLDWICK, New Jersey–(COMMERCIAL WIRE)–I am better has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” (Excellent) to Palms Specialty Insurance Company, Inc. (Palms Specialty) (Delaware). The outlook assigned to these Credit Ratings is stable.
The ratings reflect Palms Specialty’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and adequate enterprise risk management (ERM).
Palms Specialty is a newly formed specialty insurer focusing on US surplus and surplus lines accounts, providing coverage for specialty properties, professional lines, and other specialty lines with manageable gross limits. The ratings reflect the strategic importance of Palms Specialty to its parent company.
The strong balance sheet assessment is based on Palms Specialty’s supporting risk-adjusted capital that meets AM Best’s guidelines for newly formed organizations. AM Best expects Palms Specialty to maintain favorable risk-adjusted capital levels throughout its start-up phase based on balance sheet projections provided by Palms Specialty management. AM Best assesses Palms Specialty’s operating performance as adequate based on its clearly defined business plan and income statement projections that address a level of implementation and execution risk for a newly formed entity. AM Best believes that Palms Specialty’s business profile is limited, given the execution risk associated with a new entity and the degree of competition in its selected market. This risk is somewhat mitigated by the management team’s experience in the targeted business class, coupled with the parent company’s brand and track record of success. Palms Specialty is expected to benefit from the parent company’s established and proven ERM framework.
A negative rating action could occur if the company’s actual operating performance or balance sheet strength differs materially downward from the initial business plan.
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