AM Best Revises Outlooks to Negative for Southern Vanguard Insurance Company

AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Southern Vanguard Insurance Company (Southern Vanguard) (Houston, TX).

The Credit Ratings (ratings) reflect Southern Vanguard’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The negative outlooks reflect pressure on Southern Vanguard’s operating performance given the underwriting volatility in recent years, particularly in 2023 and 2024, which were primarily driven by increased loss frequency and severity of weather-related loss events. Southern Vanguard also has a geographic concentration of risk, which leaves its susceptible to adverse weather conditions and has greatly contributed to the volatility in underwriting results in recent years. While AM Best notes that Southern Vanguard has undertaken initiatives to improve and stabilize its underwriting and operating performance, the ultimate effectiveness of these efforts remains uncertain. A prolonged continuation of unfavorable trends may result in further negative rating actions.

Southern Vanguard’s balance sheet strength assessment is very strong and is supported by its strongest risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which remained at the strongest level. Positive factors include its conservative investment portfolio, adequate liquidity, comprehensive reinsurance with strong partners, somewhat offset by elevated underwriting leverage, adverse development experienced in recent years and somewhat limited scale of operations. The limited business profile reflects Southern Vanguard’s property predominate book of business and geographic centration in Texas, which exposes its operations to severe weather-related events as observed in recent years. AM Best assess Southern Vanguard’s ERM as appropriate for its size and scale of operations with risk identification and controls in place. As noted on June 3, 2025, Southern Vanguard entered into a sale agreement with Wintaai America Inc. (see related press release.) While part of the sale includes an additional capital contribution to Southern Vanguard post-close, the transaction is not expected to have a material impact on the ratings.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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