The revised outlook reflects Kingstone’s recently improved risk-adjusted capitalization and continued favorable operating earnings, which have enabled it to consistently grow its policyholders’ surplus. Kingstone’s risk-adjusted capitalization significantly improved at year-end 2013, driven by a
The ratings reflect Kingstone’s strong risk-adjusted capitalization, favorable five-year operating performance and local market knowledge in its predominant operating territory of
Partially offsetting Kingstone’s positive rating factors are its dependence on reinsurance and its concentration of risk, primarily in downstate
While Kingstone’s single-state concentration exposes it to weather-related events, catastrophe exposure is partially mitigated through catastrophe reinsurance, which it purchased increased limits in recent years, as well as the use of hurricane deductibles, visual risk inspections, distance-from-shore restrictions and surcharges. In addition, the company has been expanding its operating territory to regions beyond the
The potential for rating upgrades exists if Kingstone maintains the favorable operating performance that it has demonstrated in recent years and maintains its risk-adjusted capitalization. There could be negative pressure on Kingstone’s ratings going forward if its favorable operating performance were to deteriorate or its risk-adjusted capitalization were to materially weaken.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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