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AM Best has withdrawn its financial strength rating for Sunrise, Florida-based Capacity Insurance, and the company has stopped writing new business.

“Due to a variety of circumstances, the Florida market has undergone tremendous changes over the last year. As a result, we halted binding new business effective June 21, 2022,” the Capacity website reads.

Trimble (Linkedin)

Capacity President Linc Trimble and other company officials could not be reached for comment Friday. The insurer since 1989 has provided property-casualty coverage for light mercantile, offices, lessor’s risk, gas stations, houses of worship, trade contractors, funeral homes and other small-to-mid-sized businesses.

Capacity in 2009 was acquired by Team Focus Insurance Group, which was acquired by Peak6 insurtech and investment firm one year ago. Capacity’s affiliate and managing general agency, MacNeill Group, continues to work with other carriers, the company’s website noted.

AM Best announced Thursday that it withdrawn Capacity’s financial ratings after the company said it no longer wished to participate in the rating process. The rating firm had just downgraded Capacity’s financial strength rating to “C++ marginal” and said the outlook for the company is negative.

The downgrades reflect Capacity’s balance sheet and “an unfavorable shift” in its capitalization, as well as erosion of its surplus.

“Furthermore, the company’s capital structure is dependent on a $7 million surplus note (due in 2029) that was issued in early 2022,” AM Best wrote in the news release. “The company has continued to report adverse loss reserve development stemming primarily from management’s efforts to correct current reserves and subdue future deficiencies.”

Recent corrective actions taken by the company did not solve the problem, AM Best noted.

The rating firm did not indicate Capacity’s number of policies in force. In 2019, it had about $17 million in direct written premium, or less than 0.1% of the Florida market, according to a report from consultant Guy Fraker.

TOPICS FLORIDA