AM Best has affirmed the financial strength rating of ‘A-’ (Excellent) and the long-term issuer credit rating of ‘a-’ (Excellent) of Prism Assurance, with ‘stable’ outlook.
Based in Vermont, Prism is the single-parent captive insurer of Apogee, one of the largest architectural design and construction firms in the US.
The ratings reflect Prism’s very strong balance sheet, adequate operating performance, limited business profile, and appropriate enterprise risk management.
The stable outlook indicates AM Best’s expectation that Prism will continue to maintain its robust capital position, supported by the strongest level of risk-adjusted capitalisation as measured by Best’s Capital Adequacy Ratio (BCAR), along with consistent income from intangible assets and prudent risk management practices.
AM Best also highlights the captive’s strong liquidity position, which is backed by its ability to access a loan-back from Apogee and the financial flexibility available through the parent company, if required.
Prism benefits from a low expense structure and minimal distribution costs, resulting in a significantly lower expense ratio compared to traditional commercial insurers.
While underwriting performance is subject to some volatility due to the nature of low-frequency, high-severity claims, the company’s results remain stable.
The captive receives steady investment income from trademark-related royalties and interest on the loan-back to its parent, supporting profitability metrics that exceed industry averages over five and 10-year periods.
Although Prism’s business profile is considered limited due to its focus on providing specialised coverage for Apogee, its exposures reflect the geographical reach of the parent’s operations.
The captive is fully integrated into Apogee’s enterprise risk management framework, demonstrating strong risk identification and mitigation capabilities in coordination with the wider organisation.
AM Best notes that a negative rating action could result from a deterioration in Prism’s operating performance that weakens its capital strength or if there is a material change in the perceived ability or willingness of Apogee to support the captive.
