AM Best Affirms Credit Ratings of ACMAT Corporation and ACSTAR Insurance Company

Rhea-AI Summary

AM Best has affirmed a Long-Term Issuer Credit Rating of “bbb” for ACMAT Corporation (ACMT) and an A (Excellent) rating for its subsidiary, ACSTAR Insurance Company. The outlook for both ratings is stable, driven by ACSTAR's strong balance sheet and enterprise risk management. However, the ratings reflect a notable decline in premium volume due to management's selectivity in a competitive market and the impact of COVID-19 on construction delays. Despite this, AM Best anticipates improved opportunities from recent infrastructure legislation.

Positive

• Affirmation of Long-Term Issuer Credit Rating of 'bbb' for ACMAT Corporation.
• ACSTAR Insurance Company maintained an A (Excellent) Financial Strength Rating.
• Expectations of increased opportunities due to recent infrastructure legislation.

Negative

• Significant decline in premium volume in recent years due to competitive market conditions.
• Contracted underwriting profits due to delays in construction projects during the COVID-19 pandemic.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb” (Good) of ACMAT Corporation (ACMAT) (Farmington, CT) [OTC Market: ACMT]. Concurrently, AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term ICR of “a” (Excellent) of ACMAT’s wholly owned subsidiary, ACSTAR Insurance Company (ACSTAR) (Chicago, IL). The outlook of these Credit Ratings (ratings) is stable.

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

The ratings consider ACSTAR’s strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), management’s extensive knowledge and experience in its niche specialty within the surety sector, coupled with a disciplined underwriting philosophy. Partially offsetting these positive rating factors is a significant decline in premium volume in several recent years due, in part, to management’s selectivity in extremely competitive market conditions, and in 2020, the delay and halting of construction projects during the height of the COVID-19 pandemic. As a result, ACSTAR’s underwriting profits have contracted over several years. With the expectation of increased activity emanating from the recent passing of infrastructure legislation, AM Best expects ACSTAR will see more opportunities on which to compete with its terms and conditions and will continue to closely monitor the company’s premium volume, along with the evolving market conditions, to ensure that the limited business profile assessment remains appropriate.

The stable outlooks reflect AM Best’s expectation that ACSTAR’s risk-adjusted capitalization will remain supportive and that its operating results will remain profitable in the near term.

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 www.ambest.com.

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20220203005595/en/

Adrienne Stark

Senior Financial Analyst

+1 908 439 2200, ext. 5526

adrienne.stark@ambest.com

Dan Teclaw

Associate Director

+1 908 439 2200, ext. 5394

dan.teclaw@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Jim Peavy

Director, Communications

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: AM Best

FAQ

What recent ratings did AM Best assign to ACMAT Corporation (ACMT)?

AM Best affirmed a Long-Term Issuer Credit Rating of 'bbb' for ACMAT Corporation.

What is the Financial Strength Rating of ACSTAR Insurance Company?

ACSTAR Insurance Company received an A (Excellent) Financial Strength Rating from AM Best.

What factors influenced the ratings for ACMAT and ACSTAR?

The ratings reflect ACSTAR's strong balance sheet, operating performance, and challenges from a competitive market and COVID-19 construction delays.

What is the outlook for ACMAT Corporation according to AM Best?

The outlook for ACMAT Corporation is stable.

How could the recent infrastructure legislation affect ACSTAR Insurance Company?

AM Best anticipates that the recent infrastructure legislation will provide more competitive opportunities for ACSTAR.