Home Business Illinois’ Dover Bay Specialty Insurance Company Downgraded by AM Best

Illinois’ Dover Bay Specialty Insurance Company Downgraded by AM Best

by Cedric Guzman

AM Best, a global credit rating agency specializing in insurance ratings, has downgraded the Financial Strength Rating (FSR) and the Long-Term Issuer Credit Rating (Long-Term ICR) of Dover Bay Specialty Insurance Company. The company is based in Bloomington, Illinois.

The FSR rating has been downgraded to B++ (Good) from A (Excellent), while the Long-Term ICR rating has been downgraded to “bbb+” (Good) from “a” (Excellent). The outlook for the FSR has been revised from negative to stable, while the outlook for the Long-Term ICR remains negative.

According to AM Best, the ratings of Dover Bay reflect its strong balance sheet strength, marginal operating performance, limited business profile, and appropriate Enterprise Risk Management (ERM). Additionally, the ratings receive a lift from its parent company, State Farm Mutual Automobile Insurance Company.

The rating downgrades are a result of Dover Bay’s persistent underwriting losses since 2021. AM Best revised the outlooks to negative at that time, attributing the losses to numerous weather-related events impacting the states where most of Dover Bay’s underwriting exposures are based, particularly Louisiana, Texas, and other Gulf Coast and South Atlantic states.

Dover Bay has attempted to reduce its net risk retention by purchasing external reinsurance. However, the cost of such protection has substantially increased due to adverse industry-wide catastrophe loss experience. The repeated loss events have led to net underwriting losses, causing a deterioration in capital and surplus. Dover Bay primarily underwrites homeowners insurance on an excess and surplus lines basis in southern coastal territories.

It is worth noting that this information comes from AM Best, a reputable source of insurance ratings and industry analysis. The downgrade in ratings serves as a reflection of Dover Bay Specialty Insurance Company’s financial performance, particularly in light of the weather-related losses it has experienced in recent years.

For more articles related to carriers and excess surplus, as well as information about insurance in Illinois and AM Best, please visit the provided links.

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