AM Best has placed under review with negative implications the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Southern Trust Insurance Company (Southern Trust) (Macon, GA).

The Credit Ratings (ratings) of Southern Trust have been placed under review with negative implications following material erosion in risk-adjusted capitalization as of the second quarter 2024. This position was driven primarily by surplus erosion due to adverse loss reserve development related to legacy reserves and inflation-related issues that have negatively impacted the company’s overall balance sheet strength.

While the new ownership group has demonstrated explicit support via contributed capital in prior periods and expressed intentions to further support Southern Trust, the under review with negative implications status reflects the potential for negative rating action should the capital management plans communicated with AM Best not occur within the expected time frame. This strategy includes an additional capital contribution expected in the near term and corrective actions to stabilize the company’s reserve position. Management is in the process of a comprehensive reserve review to better gauge the company’s capital requirements and to stem future adverse loss reserve development issues. The ratings will remain under review until successful completion of intended action plans and AM Best evaluates the impact on Southern Trust’s ratings, particularly as it relates to the risk-adjusted capital position compared with prior periods and viability of stabilization in reserve development. Additionally, AM Best will continue to monitor Southern Trust’s corrective actions as it relates to improvement in its operating performance results.

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 Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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