AM Best maintains negative outlook on Universal NA’s B FSR

By Keira Wingate

Aug 19 - (The Insurer) - Universal North America Insurance Company (UNAIC)’s B financial strength rating (FSR) remains under review with negative implications by AM Best as the carrier’s management works on its business plan and capital management strategy.

Alongside the FSR of B, Arlington, Texas-based UNAIC holds a long-term issuer credit rating (ICR) of bb from AM Best, which is also under review with negative implications.

The ratings have been under review with negative implications since October 2023 following UNAIC’s policyholder surplus taking a hit from weather events that year.

According to statutory data compiled by S&P Capital IQ, at the end of 2021, UNAIC’s capital and surplus totaled $68.9 million, but by the end of the following year, that had fallen to $51.2 million.

At 2023’s close, UNAIC’s capital and surplus had decreased further to $49.1 million. Come the end of 2024, UNAIC’s capital and surplus had slightly recovered to $58.4 million.

AM Best in February downgraded UNAIC’s FSR to B from B-plus, and its long-term ICR to bb from bbb-minus, while the agency at the time maintained the ratings under review with negative implications.

That action came after UNAIC’s ultimate parent, Puerto Rico’s Universal Group, agreed to sell its U.S. operations to 5B Alliance.

Those U.S. operations included UNAIC’s holding company and its subsidiaries, and an affiliated MGA. The stock purchase agreement took effect on January 31, 2025,

As AM Best explained, UNAIC’s management has requested additional time to further develop its business plan and capital management strategy.

Consequently, AM Best said it will keep the FSR and long-term ICR under review with negative implications until it can view the updated business plan under its new ownership structure.

“The negative implications point to financial-strength uncertainty at the new intermediate holding company, 5B Alliance, LLC, and the ultimate parent, which is an individual entity,” AM Best explained.