AM Best has assigned a Financial Strength Rating (FSR) of A- (Excellent) and a Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) to Universal Fire & Casualty Insurance Company (UFCIC) (headquartered in Waterford, MI) and its wholly owned subsidiary, Shield Indemnity Incorporated (Shield) (Dublin, OH). The outlook assigned to these Credit Ratings (ratings) is stable. The ratings reflect the execution of an intercompany pooling agreement between UFCIC and Shield. These companies are collectively referred to as Universal Shield Insurance Group (USIG).
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The ratings reflect USIG’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.
On Dec. 31, 2021, UFCIC and its parent company, UIM Holding Company, merged with Shield. As part of the merger, a new property/casualty (P/C) focused holding company, Universal Shield Insurance Group, Inc., was formed. UFCIC has historically specialized in writing bail surety. Shield, which previously focused on general liability as an admitted South Carolina domestic carrier, was redomesticated as a domestic surplus lines company in Ohio.
Going forward, the group’s focus will be on providing admitted and non-admitted P/C insurance solutions for small businesses, as well as commercial surety and bail surety. The P/C business will include primarily property and liability coverages for small businesses, while commercial surety will offer primarily license & permit and miscellaneous bonds. Currently, the group is fully licensed to provide P/C products in 31 states, and is seeking to broaden its geographic footprint through expanded licensure and varied distribution channels.
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The ratings of the group reflect its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), supported by effective management via underwriting controls and reinsurance in line with exposures. The ratings also reflect the group’s historically profitable operating results and an appropriate ERM program in place, which is aligned with the group’s stated risk profile. Partially offsetting these positive rating factors are the potential execution risks associated with the group entering into new small commercial P/C lines of business and commercial surety offerings, and its geographic expansion.
The stable outlooks reflect AM Best’s expectation that the group will maintain very strong balance sheet strength over the intermediate term and that operating results will remain profitable, contributing to organic surplus growth.
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