A.M. Best Affirms and Assigns Ratings to Intrepid Insurance Company
May 09 2007 - 3:25PM
Business Wire
A.M. Best Co. has affirmed the financial strength rating of A-
(Excellent) and assigned an issuer credit rating of �a-�to Intrepid
Insurance Company (Intrepid) (Farmington Hills, MI). The outlook
for both ratings is stable. The rating is based on Intrepid�s
strong capitalization, the program�s favorable loss ratios and the
company�s niche market expertise. Further, Intrepid�s parent,
DaimlerChrysler Insurance Company (DCIC) [NYSE: DCX], issues an
unconditional claim payment guarantee endorsement with each policy
issued. Partially offsetting these positive rating factors is
Intrepid�s minimal spread of risk as a single line writer to a
generally homogeneous insured population and the relatively large
policy limits offered relative to its surplus size. In addition,
the company is subject to weather-related losses. However, Intrepid
uses facultative reinsurance on insureds with large weather-related
exposures to reduce the potential for catastrophic losses. Although
the marketing, underwriting and claims management is handled
through a third party, there is a profit sharing agreement between
DCIC and the managing general agent (MGA), DealerGuard, that
performs these functions. As a result, the MGA is incentivized to
run this program profitably. Intrepid reimburses DealerGuard for
the expenses it incurs to manage the program in addition to paying
ceding commissions to its agents. As a result, Intrepid�s
underwriting expense ratios are somewhat elevated compared to its
industry peers. As all business is generated by a third party,
there is the risk that the MGA could begin offering its coverages
through a different carrier. Management believes its profit sharing
agreement encourages DealerGuard to maintain its current
relationship with Intrepid. For Best�s Ratings, an overview of the
rating process and rating methodologies, please visit
www.ambest.com/ratings. Founded in 1899, A.M. Best Company is a
full-service credit rating organization dedicated to serving the
financial services industries, including the banking and insurance
sectors. For more information, visit www.ambest.com.
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