AM Best improves credit ratings for Knight Insurance Company Ltd. and its affiliates
AM Best upgraded the financial strength rating from B++ (Good) to A- (Excellent) and the long-term issuer credit rating to “a-” (Excellent) from “bbb+” (Good) of Knight Insurance Company Ltd . (Knight Insurance) (Cayman Islands), KnightBrook Insurance Company (Wilmington, DE) and Knight Specialty Insurance Company (Wilmington, DE). The outlook for these Credit Ratings (ratings) is stable. These companies are collectively referred to as Knight.
These ratings reflect Knight’s balance sheet strength, which AM Best rates as very strong, as well as adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The rating upgrades reflect Knight’s operational and process improvements that have been instituted by its management team over the past five years, resulting in steady improvement in ongoing and forward-looking operating performance while reducing considerably the unfavorable development of the reserves for losses of the previous years. During this period, the company also strengthened the monitoring and control of its general agent and third-party claims adjuster partners and improved its underwriting guidelines, which contributed to the turnaround. Additionally, Knight recently executed a Loss Portfolio Transfer (LPT) and Adverse Development Hedge (ADC) to cleanly isolate the balance sheet from any other prior adverse developments. The LPT cedes unearned loss and premium reserves from more than 20 terminated programs to Hankey Re, a new separate holding cell company backed by the group’s ultimate owner, Don Hankey, while the ADC covers the Knight’s Venture program , which is currently his largest active program.
The ratings also reflect Knight’s improved risk-adjusted capitalization and the strategic role it plays as a member of the Hankey Group, a group of companies that operate primarily in the automotive industry. Knight Insurance offers various lines of coverage for affiliated and non-affiliated programs. Its main lines of business are commercial automotive and general liability.
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