Credit rating agency KBRA has assigned a BBB Insurance Financial Strength Rating (IFSR) to Trident Reciprocal Exchange (Trident), with a stable outlook.
Trident is a newly established de novo reciprocal exchange focused on writing homeowners’ insurance in Florida.
The rating reflects Trident’s low underwriting leverage and substantial surplus relative to expected premiums written.
The company benefits from entering a market with improved pricing and reduced litigation risks due to recent legislative reforms.
As a start-up, Trident has no legacy liabilities and will have manageable initial expenses due to an organisational structure where the Attorney-in-Fact (AIF) covers most start-up costs.
KBRA also views the company’s business plan as reasonable, supported by a management team with extensive experience in the Florida homeowners’ insurance market.
Balancing these strengths is Trident’s high financial leverage due to its entire surplus base consisting of a $27 million surplus note.
Additionally, as a Florida homeowners’ insurer, Trident faces product and geographic concentration, natural catastrophe exposure from hurricanes, and a heavy reliance on reinsurance, which could significantly impact results depending on its availability and cost.
As a new insurer, Trident’s future profitability remains uncertain and depends on the successful execution of its business plan by management.
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