AM Best Assigns Credit Rating of 'a' to CompSource

Monday, December 14, 2020 | 0

AM Best assigned a financial strength rating of “A (Excellent)” and a long-term issuer credit rating of “a” to CompSource Mutual Insurance Co., headquartered in Oklahoma City.

AM Best said the outlook assigned to the CompSource credit ratings is stable.

The agency said its rating reflects the strength of CompSource’s balance sheet, operating performance, limited business profile and appropriate enterprise risk management.

“CompSource Mutual’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, is categorized as strongest,” AM Best said in a statement. “The balance sheet strength assessment also considers the company’s underwriting leverage ratios, which compare favorably with the workers’ compensation composite; low reinsurance dependence with a high-quality reinsurance panel; and a diverse investment portfolio with investment leverage metrics that are below the (workers’ compensation) composite.”

AM Best said most of the CompSource five-year operating metrics are consistent with or slightly better than the work comp composite.

“The company’s results improved following mutualization and reforms in the Oklahoma (workers’ compensation) system in 2014, which converted the system from a judicial-based system to an administrative-based system,” according to AM Best.

While CompSource has limited diversification as a monoline work comp carrier, it is susceptible to judicial, legislative and regulator changes as a result of being licensed in only Oklahoma. Nonetheless, AM Best said it considers CompSource’s risk management capabilities to be appropriate for the company’s risk profile.