AM Best has upgraded the Financial Strength Rating to B+ (Good) from B (Fair) and the Long-Term Issuer Credit Rating to “bbb-” (Good) from “bb+” (Fair) of One Alliance Insurance Corporation (One Alliance) (San Juan, Puerto Rico). The outlook of these Credit Ratings (ratings) is positive.

The ratings reflect One Alliance’s balance sheet strength, which AM Best assesses as adequate, as well as its adequate operating performance, limited business profile and marginal enterprise risk management.

The rating upgrades reflect the change in One Alliance’s operating performance assessment to adequate from marginal following an improvement in its operating performance in recent years. Despite reporting significant growth in premiums, operating earnings have been favorable with a five-year average return on equity and return on revenue metrics, which compare favorably to AM Best’s commercial property composite. The improvement in performance is the result of management’s initiatives to gain scale while maintaining a conservative reinsurance program to protect surplus. Furthermore, Puerto Rico has experienced mild weather conditions, which has also contributed to favorable results.

The positive outlook on the ratings reflects One Alliance management’s dedication of resources to improving risk and exposure to management capabilities, as well as risk selection. The effectiveness of these initiatives has shown overall stabilization in the company’s profitability in recent periods. One Alliance purchases catastrophe reinsurance protection above its modeled 250 return period; however, there is significant tail risk as evidenced by Best’s Capital Adequacy Ratio at the 99.8% VaR.

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.

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