OLDWICK, N.J.– AM Best has assigned a Preliminary Credit Assessment (PCA) to New England Indemnity Company (NEIC) (Bedford, NH) with a Financial Strength Assessment of A- pca (Excellent) and a Long-Term Issuer Credit Assessment of “a-” pca (Excellent). The outlook assigned to the PCAs is stable.
The PCAs reflect NEIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The balance sheet strength assessment is driven by AM Best’s expectation that NEIC will maintain the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), over the five-year startup period. Additionally, the assessment is contingent upon management executing its proposed plans, as well as maintaining an appropriate capital buffer to support future growth plans. The balance sheet strength assessment further reflects NEIC’s conservative investment portfolio; the company plans to grow conservatively by maintaining underwriting leverage ratios below or in line with its composite averages.
The operating performance assessment is based on NEIC’s operating results that are expected to benefit from the expertise of the management team, which has longstanding partnerships in the insurance industry. NEIC’s projections reflect the startup nature of the company with outsized expenses at the onset. The company is expecting to report modest income in the near term, which is contingent upon the successful execution of its business plan. The company’s business plan reflects a consistent stream of net investment income, which will be derived from the fixed-income portfolio.
The business profile assessment is based on NEIC’s narrow geographic and product concentrations, along with execution risk. The company plans to write personal and small commercial insurance products in New Hampshire. The company intends to distribute business exclusively through the independent agency channel with already established agency partners. In addition, third-party tools will be utilized to guard against rate evasion, adverse selection and fraud. The company is also licensed in New Hampshire for accident & health (A&H) products; however, it has no current plans to write any A&H business.
The ERM assessment is based on a formalized ERM policy that has been established and approved by the NEIC’s board of directors. The company’s board is made up of experienced insurance and finance professionals, and it mandates accountability throughout the organization and addresses various risk management topics in each quarterly meeting. The ERM program is expected to continue to develop as the company expands the established structure. In addition, the company utilizes a combination of per-risk excess of loss and catastrophe coverage, as well as facultative coverage when necessary.
NEIC was licensed as a New Hampshire property/casualty insurance company on Feb. 14, 2024. The company is a wholly owned subsidiary of NEIC Holding Company, Inc. (NEIC Holdings), alongside its affiliated service company, NEIC Services Company, Inc. (NEIC Services). The company maintains modest financial flexibility through NEIC Holdings to provide additional capital if warranted to support growth plans.
Source: AM Best
