American Risk Insurance Company Rating: Everything You Need to Know

Choosing the right insurance company to protect your home or business is an important decision. You want to be confident you’re picking a financially stable insurer that will be there when you need them. One key factor to consider is the insurance company’s financial strength rating.

For regional insurers like American Risk Insurance Company, an important rating to look for is their Demotech rating. American Risk holds an “A” or “Exceptional” rating from Demotech.

This article will explain everything you need to know about American Risk Insurance Company’s Demotech rating, including:

  • What Demotech is and why their ratings matter
  • Details on American Risk’s “A” Exceptional Rating
  • What the rating indicates about American Risk’s financial health
  • How Demotech ratings differ from other agency ratings
  • What an Exceptional Rating means for policyholders
  • And more

Let’s start with an overview of Demotech and the rating system.

What is Demotech?

Demotech, Inc. is a Columbus, Ohio-based financial analysis firm that focuses on the insurance industry. They have been analyzing and rating regional and specialty insurers since 1985.

Demotech issues Financial Stability Ratings that assess an insurer’s financial health and ability to pay out claims. They utilize a proprietary modeling system and benchmark the insurer against industry standards.

Key facts about Demotech:

  • Focuses specifically on regional and specialty insurers, unlike agencies like S&P and Moody’s.

  • Rates over 400 regional insurers across the U.S.

  • Particularly respected when rating Florida property insurers due to their hurricane risk analysis expertise.

  • Ratings aimed at helping consumers make informed choices when buying insurance.

Next let’s look at American Risk’s specific Demotech rating.

American Risk Insurance Company’s Demotech Rating

American Risk Insurance Company currently holds an A or “Exceptional” Financial Stability Rating from Demotech.

This Exceptional or A rating was reaffirmed for American Risk in November 2016 after Demotech’s most recent analysis.

What Does an “A” or “Exceptional” Rating Mean?

Demotech describes insurers with A or Exceptional ratings as showing:

  • Exceptional financial stability
  • Highest level of confidence
  • Lowest expectations of partial policyholder payments if claims occur

The Exceptional Rating is the highest rating Demotech issues. It is reserved for insurers that pass Demotech’s rigorous capital adequacy and solvency benchmarks.

Companies need abundant capital, surplus, and liquidity to earn an A rating. American Risk met or exceeded Demotech’scapital requirements.

So in plain terms, American Risk receiving an A rating indicates they are financially very strong and stable. Demotech has a high degree of confidence in their ability to pay out policyholder claims.

Details of American Risk’s Rating

American Risk’s A or Exceptional Rating from Demotech applies to their:

  • Homeowners insurance policies
  • Fire and dwelling policies
  • Commercial lines insurance products

It indicates these policy types show exceptional financial stability, based on Demotech’s analysis specific to those products and markets.

Key Takeaway: American Risk Insurance Company holds Demotech’s highest A/Exceptional Financial Stability Rating across their homeowners, fire, dwelling, and commercial lines.

Next let’s look at how Demotech ratings differ from other agency ratings.

How Demotech Ratings Compare to Other Agency Ratings

Large nationally recognized rating agencies like A.M. Best, Standard and Poor’s, and Moody’s also analyze and rate insurers’ financial strength. For example, American Risk holds an A- rating from A.M. Best.

Here are some key ways Demotech ratings differ from the major agencies:

  • Specialize in regional insurers – Demotech focuses specifically on smaller regional and specialty insurers that may fly under the radar of companies like S&P and Moody’s.

  • In-depth modeling – Demotech claims to use more robust capital modeling techniques tailored to smaller insurers versus the major agencies.

  • Multiple solvency analysis – Demotech ratings incorporate analysis of both asset adequacy and capital adequacy. Most other agencies only look at capital.

  • Responsive – Demotech frequently reviews and updates ratings in response to market changes. Ratings from larger agencies often remain unchanged for years.

So while S&P, Moody’s, and A.M. Best ratings are still useful benchmarks, Demotech provides specialized analysis and ratings valuable to the policyholders of regional insurers like American Risk.

Key Takeaway: Demotech ratings offer specialized financial analysis tailored for regional insurers versus the broad ratings of larger agencies.

What does American Risk’s strong Demotech rating suggest about their financial position? Let’s discuss that next.

What American Risk’s Exceptional Rating Indicates

Earning an A or Exceptional Rating from a respected financial analyst like Demotech is a meaningful indicator of an insurer’s financial health and ability to pay claims.

For American Risk policyholders, an Exceptional Rating indicates:

  • Strong capital position – American Risk has strong capital reserves to support their insurance products and shoulder risk, based on Demotech’s capital adequacy modeling. This gives them flexibility to cover claims following major storms or events without compromising their finances.

  • Financial stability – The rating suggests American Risk has solid financial management. They earn profits commensurate with their risk portfolio and cost structure. Their finances are on stable footing.

  • Responsible growth – Demotech analysis indicates American Risk has grown responsibly over the years. They have not overextended their capabilities.

  • Claims paying ability – Most importantly, the Exceptional rating signals that American Risk has a superior ability to pay out policyholder claims when they arise. They have ample liquidity and resources.

Key Takeaway: The A rating reflects American Risk’s overall financial strength, stability, responsible growth, and excellent ability to fulfill claims obligations.

Finally, let’s discuss what an Exceptional Demotech rating means for policyholders specifically.

What American Risk’s Rating Means for Policyholders

As a policyholder of American Risk Insurance Company, their A or Exceptional Demotech rating indicates:

  • Peace of mind – You can have increased confidence that American Risk has the financial stability and wherewithal to pay your claim if the need arises. Demotech’s analysis provides assurance that the company takes claims obligations seriously.

  • Reduced risk – American Risk having strong finances and resources results in less risk of you experiencing loss due to insurer insolvency. Their balance sheet is healthy enough to weather storms and major claims events without detrimental impacts to policyholders.

  • No guaranty association reliance – American Risk’s exceptional finances make it highly unlikely (though not impossible) that policyholders would ever need to rely on state guaranty associations in the event of insolvency. This association protection is a last resort.

  • Company incentives – The rating gives American Risk incentive to maintain disciplined underwriting and risk management standards in order to retain their strong financial metrics. This includes adequate home inspections, pricing based on exposure, having proper reinsurance, etc. Policyholders benefit from these good practices.

Key Takeaway: The Demotech rating signals that American Risk has the resources and stability to deliver on their promises to policyholders.

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How long has American Risk Insurance been in business?

American Risk Insurance Company, Inc. is domiciled in Texas and was incorporated on February 22, 2007. American Risk commenced business on February 28, 2007 and had been offering Homeowner’s and Commercial Insurance products in the State of Texas since.

What are the top 5 insurance rating agencies?

Five independent agencies—A.M. Best, Fitch, Kroll Bond Rating Agency (KBRA), Moody’s and Standard & Poor’s—rate the financial strength of insurance companies. Each has its own rating scale, its own rating standards, its own population of rated companies, and its own distribution of companies across its scale.

What is AA rated insurance company?

An insurance company’s A.M. Best “A” rating is a key indicator of its financial stability and standing amongst its competitors. Additionally, an A-rating demonstrates its ability to meet its customers’ ongoing needs.

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