AM Best Revises Southern Vanguard Insurance Company Outlook To Negative



OLDUICK, NJ – () –AM Best changed the outlook from “Stable” to “negative” and affirmed the financial stability rating “A-” (“excellent”) and the long-term credit rating of the issuer “a-” (“excellent”) to the insurance company “Southern Avangard”. (SVIC) (Houston, TX).

Credit ratings (ratings) reflect the stability of the SVIC balance sheet, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and proper enterprise risk management.

The negative outlook reflects the recent increase in the holding company’s unsecured debt (InsVest Corp) due to the recently issued line of credit. The debt was used to buy out minority shareholders. While management has a good track record of keeping borrowing costs low, paying off debt quickly through high returns from the managing agency, and maintaining moderate leverage, the latest debt balance (as of Q1 2021) is considered elevated according to AM Best Methodology guidelines. In addition, while SVIC has generated positive net income in each of the past five years, potential plans to increase work in 2021 in a disaster-prone new operating territory (Florida) will add execution risk to the current business plan and additional new risks. in their business books. However, AM Best expects SVIC’s growth to be conservative and the company plans to implement a sizable quota reinsurance program for most of this business. A negative rating action could occur if SVIC’s growth plans result in unfavorable results for the ledger, or if the holding company’s leverage remains high, or if management is not meeting the payout schedule.

This press release refers to the credit ratings published on the AM Best website. For all rating information pertaining to the issue and related disclosures, including details of the department responsible for assigning each of the individual ratings mentioned in this issue, see AM Best’s Recent rating activity Internet page. For more information on the use and limitations of credit rating scores, please review Best Credit Ratings Guide… For information on the proper use of Best’s Credit Ratings media and AM Best press releases, please review Media Guidelines – Proper Use of Best Credit Ratings and AM Best Rating Action Press Releases

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