AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of "bbb" to Genesee Patrons Cooperative Insurance Company (Genesee) (Batavia, NY). The outlook assigned to these Credit Ratings (ratings) is stable.
The assigned ratings reflect Genesee’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management.
Genesee’s balance sheet strength assessment is supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), reflective of relatively low underwriting leverage and favorable loss reserving trends. The balance sheet strength also is supported by strong liquidity measures and fairly consistent surplus growth. Offsetting factors include limited scale of operations and limited financial flexibility. The company also has an elevated equity position in its investment portfolio, which leaves its surplus susceptible to stock-market downturns.
Genesee has generated profitable operating return measures, which have been bolstered by consistent net underwriting earnings in each of the past five years and a low pure loss ratio. AM Best notes that improved results in the most-recent five-year period reflect profitability initiatives implemented 10 years ago by new management, including technological investments and revised underwriting strategies. The lack of investment income in recent years is due to an elevated equity position that is held predominantly in long positions by the company. However, Genesee has recorded net income each year since 2010. Prospectively, AM Best does not expect any material change in the company’s profitability levels.
Genesee provides predominantly property coverage in the western region of New York state. The company was incorporated in May 1877 as an assessment cooperative insurance company, formed through the efforts of members of The National Grange of the Order of Patrons of Husbandry.
AM Best views the company’s business profile as limited based on its geographic concentration in New York, which exposes results to weather-related events, as well as changes in the regulatory, judicial and economic environments. The product offerings, although predominantly property, include personal and commercial lines of business. In addition, risk management capabilities appear to be appropriate for the size and complexity of the company. Genesee benefits from a comprehensive reinsurance program, with low retentions and unlimited catastrophe coverage, resulting in the net probable maximum loss comprising a modest amount of surplus.
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