Business credit

AM Best assigns credit ratings to PURE Specialty Exchange

OLDWICK, NJ–(BUSINESS WIRE)–AM Best assigned a financial strength rating of “A” (Excellent) and a long-term credit rating of “a” (Excellent) at PURE Specialty Exchange (PSE) (Scottsdale, AZ). The outlook attributed to these Credit Ratings (ratings) is stable.

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

The ratings also take into account the implicit and explicit support provided by its subsidiary, Tokio Marine Holdings, Inc. and its main insurance company, Tokio Marine & Nichido Fire Insurance Co., Ltd.

Strong balance sheet valuation reflects PSE’s highest risk-adjusted capitalization level, as measured by Best’s Capital Adequacy Ratio (BCAR), on a pro forma basis for expected initial capitalization through Notes excess bonds issued by PSE to Privilege Underwriters, Inc. AM Best expects PSE’s risk-adjusted capitalization to remain in the strongest category with additional positive valuation factors including financial flexibility, asset quality and its conservative investment portfolio. These strengths are partially offset by PSE’s exposure to catastrophe losses, its expected reliance on reinsurance, and an initial capital structure comprised entirely of excess notes issued by PSE to Privilege Underwriters, Inc. Reliance on against excess tickets is expected to gradually decline over time due to organic growth in excess through member excess contributions and operating profitability.

AM Best believes that the company’s operating performance is adequate based on PSE’s projections and the fact that the anticipated writes and associated historical loss ratios are well known to the company. AM Best views the company’s business profile as limited given that PSE is a start-up entity and will be geographically focused in New York, California, South Carolina, North Carolina and Massachusetts. PSE’s ERM capabilities benefit from the overarching framework developed at the ultimate parent company level.

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 relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limitations of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s Credit Ratings, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.

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