We have had our share of major weather-related disasters in the U.S. this year, such as wildfires, flooding, earthquakes, and hurricanes. If there is a loss of life or property from any of these disasters, there will be an increased wave of claims submitted by policy owners to an insurance company. Some of these wide-spread calamities bring with them a significant number of claims for large losses of property and life.
In each state, all insurance-related oversight is provided by that’s state’s appointed Insurance regulator. They are responsible for scrutinizing each insurance company operating in their state to ensure they are in NAIC compliance and their surplus and reserve ratios are in line. If they are not, the insurance company is at risk of being impacted by a lowering of their credit rating at AM best, which is the top monitoring agency evaluating the fiscal health of the insurer. The financial markets make investment and credit decisions based on this rating, so it becomes critical for an insurance company to maintain the highest rating possible. To avoid a rating reduction, which would be a significant negative event, the insurer has some options, including equipment leasing.
Equipment Leases Inc. has the expertise and track record of successfully helping insurance companies manage their non-admitted assets to comply with the surplus and reserve requirements in their market. For example, we recently underwrote a $40,000,000 sale-leaseback of a carrier’s non-admitted assets such as enterprise software programming and office furniture to keep their risk ratios within strict guidelines leaving their quality AM Best ratings unchanged. Statutory filing line .20 EDP/Software and line .21 FFE (Furniture, Fixtures, and Equipment) are eligible for immediate Sale and Leaseback. At Equipment Leases, we follow the basic SAPP .22 Sales and Lease Back guidelines and provide 100% funding on qualified non-admitted assets.
This process affects you if you’re a property and casualty carrier, health insurance underwriter, or auto carrier. Claims of all kinds can erode Surplus reserves and lower your Risk-Based Capital Ratio (RBC). However, a solution for a boost in Surplus could help stabilize an agency rating from AM Best, Fitch, or Moody’s. In addition, we can assist up to $50,000,000 in non-admitted asset leasing.
Let the experts at Equipment Leasing Inc. design an equipment leasing solution for your firms nonadmitted assets before year-end. Due to the expected increase in activity in the fourth quarter, we strongly suggest starting this process early to ensure funding before year-end.