The rating upgrades are based on the improved risk-adjusted capitalization of KICO, following a
The ratings and outlooks reflect KICO’s solid risk-adjusted capitalization, favorable five-year operating performance and local market knowledge in
KICO’s favorable operating performance is reflected in the company’s double-digit five-year pre-tax returns on revenue and equity, generated by positive net underwriting income and supplemented by net investment and other income. These five-year operating returns compare favorably with the industry composite average.
Partially offsetting KICO’s positive rating factors are its dependence on reinsurance and its concentration of risk, primarily in downstate
While KICO’s single-state concentration exposes it to weather-related events, catastrophe exposure is partially mitigated through catastrophe reinsurance, which it has purchased at increased limits in recent years, as well as the use of hurricane deductibles, visual risk inspections, distance-from-shore restrictions and surcharges. Additionally, KICO has been expanding its operating territory to regions beyond the
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