AM Best Removes From Under Review with Negative Implications, Downgrades Credit Ratings of American Sentinel Insurance Company

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has removed from under review with negative implications
and downgraded the Financial Strength Rating to B++ (Good) from A
(Excellent) and the Long-Term Issuer Credit Rating to “bbb” from “a” of
American Sentinel Insurance Company (American Sentinel) (Harrisburg,
PA). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect American Sentinel’s balance sheet strength, which AM
Best categorizes as adequate, as well as its adequate operating
performance, limited business profile and appropriate enterprise risk

These rating actions reflect the sale of American Sentinel to Patrick
Kilkenny, a partial owner of K2 Insurance Services LLC, which formerly
owned American Sentinel through ownership of Aegis Security Insurance
Company. American Sentinel has been operating under a new business plan,
following the termination of its prior pooling agreement with Aegis
Security Insurance Company in 2018. The new business plan focuses on
commercial auto liability, and specifically smaller owner-operator
fleets. The company has expanded packaged offerings to support the
business that was previously offered by its affiliated agency, First
Capital. These expanded offerings, coupled with rate revisions, have led
to substantial changes in the company’s gross and net premium volumes.

Capital infusions from the company’s now exclusive owner have supported
premium growth. In addition, the company utilizes a 60% quota share
reinsurance contract to mitigate its overall net exposures. Reinsurance
partners are all highly rated and financially sound. Furthermore,
American Sentinel maintains a high quality and conservative investment

AM Best views American Sentinel’s business profile as limited; while the
company is licensed in 49 states and Washington, D.C., much of the
business is concentrated in California and Texas. The company does
benefit from an affiliated agency to produce business. However, much of
the company’s operational areas are in the early stages of development.
Furthermore, the company’s ERM program and processes also are in the
early stages of development. Management has provided documentation on
the initial structure of the ERM and governance, which appear to be in
line with a new operation. In the coming years, AM Best expects that the
company will further develop its ERM to continue to correlate with the
overall risk management of the company.

American Sentinel lacks a significant track record in its current
business lines. However, management has provided extended forecasts for
the initial years of operation. The actual results will be monitored
continuously against the original forecasts, to ensure that the building
block assessments are accurate. The rating outlooks could come under
pressure with any material deviation in actual results versus submitted
projections or if there is a significant change in business plan.

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 pertinent disclosures, including details of the office responsible
for issuing each of the individual ratings referenced in this release,
please see AM Best’s
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best’s Credit Ratings
. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases

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Dan Hofmeister, CFA
Financial Analyst
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439 2200, ext. 5385


+1 908 439 2200, ext. 5125


Manager, Public Relations
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Director, Public Relations
+1 908 439
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