PURE Insurance: Understanding Their A.M. Best Rating

When researching insurance providers, it’s important to look at their financial strength ratings from agencies like A.M. Best. These ratings help indicate an insurer’s ability to pay out future claims. So what is PURE Insurance’s A.M. Best rating and financial outlook?

This in-depth guide will examine:

• What A.M. Best ratings mean and why they matter
• PURE Insurance’s current A.M. Best rating
• Details behind their rating and outlook
• PURE’s balance sheet strength
• How their rating compares to competitors
• What an A rating means for policyholders

Overview of A.M. Best Ratings

A.M. Best is a global credit rating agency focused on the insurance industry. They analyze the financial strength of insurers based on balance sheet strength, operating performance, business profile, and enterprise risk management.

A.M. Best then assigns a letter grade rating such as A++, A+, A, A-, B++, etc. Here is what each rating level indicates:

• A++, A+ (Superior): Exceptional financial strength and ability to meet obligations
• A, A- (Excellent): Excellent financial strength with high ability to meet obligations
• B++, B+ (Good): Good financial strength but more susceptible to adverse conditions
• B, B- (Fair): Adequate financial security but vulnerable to negative changes
• C++, C+ (Marginal): Signs of weakness; increased risk of default
• C, C- (Weak): Very weak with possibility of default; avoid
• D (Poor): In default or danger of default; extremely speculative
• E (Under Regulatory Supervision): Under supervision, liquidation, or receivership
• F (In Liquidation): Legally declared insolvent

A.M. Best ratings are an important indicator of an insurer’s long-term stability and ability to pay out future claims. Higher ratings signal greater financial strength.

PURE Insurance’s A.M. Best Rating

PURE Insurance currently holds an A (Excellent) rating from A.M. Best. This means the agency has assessed PURE as having excellent financial strength and ability to meet ongoing insurance obligations.

PURE has maintained an A rating since initially being rated in 2009. Their strong position has been reaffirmed annually based on a robust capital profile, solid operating performance, experienced management team, and conservative operating strategy.

Key A.M. Best report comments on PURE Insurance:

• “Balance sheet strength at the strongest level”
• “Strong risk-adjusted capitalization”
• “Favorable underwriting and operating performance”
• “Very strong business profile as a niche player”

With 14 consecutive years as an A-rated carrier, PURE has demonstrated consistent financial excellence per A.M. Best’s analysis. Their strong ratings outlook reflects continued positive momentum.

Details Behind PURE’s A.M. Best Rating

A.M. Best analyzes four main factors when assessing an insurer’s financial strength and assigning ratings. Here is a look at how PURE Insurance specifically measures up in each area:

1. Balance Sheet Strength

• Equity-to-assets ratio: Strong at 61% as of year-end 2021
• Reinsurance program: Conservative with risk tolerance appropriate for surplus size
• Loss reserves: Adequate with no significant deficiencies

A.M. Best notes PURE’s balance sheet strength is at the strongest level, with high quality invested assets, strong liquidity, and favorable capital flexibility.

2. Operating Performance

• 10-year average return on equity: Strong at 10%
• 5-year average operating ratio: Favorable at 95%
• Profitability: Consistent underwriting and operating profits
• Growth: Controlled at rate appropriate for surplus size

PURE has a track record of favorable underwriting and operating performance, per A.M. Best’s analysis. Their consistent profits demonstrate effective execution.

3. Business Profile

• Market position: Strong niche player in U.S. high net worth space
• Plan execution: Effective implementation of strategy
• Field network: Standard distribution through independent agents and brokers
• Risk management: Very strong corporate governance and ERM oversight

As the leading U.S. insurer focused on high net worth individuals, PURE has a defensible market position and expertise.

4. Enterprise Risk Management

• Risk framework: Very strong risk controls given corporate structure
• Risk identification: Strong practices integrated through strategic planning
• Risk appetite: Aligned with capital preservation and liquidity priorities

PURE’s enterprise risk management is considered very strong for its corporate structure, with robust risk controls that enhance financial strength.

How PURE’s Rating Compares to Competitors

PURE’s A.M. Best rating is equal to most competitors focused on high net worth insurance:

• Chubb: A++ (Superior)
• PURE: A (Excellent)
• Nationwide Private Client: A+ (Superior)
• Cincinnati Insurance: A+ (Superior)
• USAA: A++ (Superior)

The main outlier is Lloyds of London. As a marketplace, Lloyd’s overall rating is A (Excellent). However, financial strength varies across Lloyd’s syndicates.

While Chubb and USAA have higher A++ ratings, PURE matches Nationwide Private Client’s A+ score. They maintain a leadership position among niche high net worth insurers.

What an A Rating Means for Policyholders

PURE Insurance’s A (Excellent) rating from A.M. Best provides key assurances for current and prospective policyholders:

1. Confidence in financial strength – Policyholders can feel confident PURE has the financial strength to pay out future claims. An A rating signifies resilience even in volatile markets.

2. Protection in a crisis – Excellent financial strength indicates PURE has the resources to continue paying claims even in extreme events impacting many customers.

3. Long-term stability – With 14 straight years as an A-rated carrier, PURE has proven staying power. Their consistent performance translates to stability.

4. Rigorous analysis – The rating reflects in-depth qualitative and quantitative analysis of balance sheet strength, operating performance, and enterprise risk management.

While not a guarantee, PURE’s A rating signals the company is well-equipped even for a 1-in-250 year catastrophic event scenario. Policyholders can have high confidence in their ability to pay future claims.

The Bottom Line: PURE Maintains Excellent Financial Strength

PURE Insurance’s strong A (Excellent) rating from A.M. Best affirms their financial stability, performance excellence, and long-term viability. With 14 consecutive years as an A-rated carrier, they have demonstrated consistent strengths across balance sheet health, operating profits, business profile, and risk management.

For high net worth individuals and families seeking tailored coverage from a reputable carrier, PURE’s A rating helps provide confidence in their financial standing and ability to pay out future claims. Policyholders can trust that PURE has the financial resources and risk management capabilities A.M. Best would expect from an insurer with excellent financial strength.