AM Best Assigns Credit Ratings to Pedcor Assurance Company

·4 min read

OLDWICK, N.J., January 21, 2022--(BUSINESS WIRE)--AM Best has assigned a Financial Strength Rating of B++ (Good) and a Long-Term Issuer Credit Rating of "bbb" (Good) to Pedcor Assurance Company (PAC) (Colchester, VT). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect PAC’s balance sheet strength, which AM Best assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

PAC’s balance sheet strength reflects its risk-adjusted capitalization that is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), along with its conservative underwriting and loss reserve leverage measures. Additionally, the company’s balance sheet strength benefits from its conservative investment portfolio and strong liquidity measures, which are enhanced by positive operating cash flow year after year. These positive factors are tempered by the large percentage of the company’s assets in the intercompany loan backs receivables. However, to somewhat mitigate this concern, the company’s parent, Pedcor Financial Bancorp guarantees repayment of these receivables.

PAC’s adequate operating performance assessment reflects the company’s historically favorable operating results, as all its insured properties are managed and/or owned by affiliates of PAC whose interests are aligned closely. However, there are some concerns regarding PAC’s recent entry into credit default insurance, which is a product that insurers against losses on portions of certain commercial loans issued by its affiliated banks. While the notional values on these loans are large relative to PAC’s surplus, defaults are considered remote and the loans are highly collateralized. Based on PAC’s projections over the next five years, the company’s adequate assessment seems appropriate.

As a single-parent captive, the company mission is to provide (re)insurance coverage on properties managed and/or owned by Pedcor Financial Bancorp along with supporting its banking affiliates with its new credit default insurance product. PAC also provides flexibility to its affiliates through a more cost-effective and stable alternative to commercial (re)insurance, particularly in hard market cycles. The company’s geographical reach spans across 19 states, which provides for some favorable geographical diversification. However, the company offers limited lines of coverage, which contributes to PAC’s limited business profile.

The company benefits from an appropriate ERM program that is well-integrated with that of a vertically integrated real estate development, banking and property management enterprise, which should lend itself to better risk identification and risk mitigation.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Brian O’Larte
+1 908 439 2200, ext. 5138


Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Daniel J. Ryan
Senior Director
+1 908 439 2200, ext. 5325

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644

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