St. Pete insurance firm gets a credit upgrade

A strong balance sheet was among the factors that led A.M. Best to upgrade the credit rating for Bankers Insurance Group, one of the largest property and casualty insurance companies in St. Petersburg.

Bankers Insurance Group now has a financial strength rating of “B++,” up from “B+.”

Scott Charbonneau, chief actuary, Bankers Insurance

Bankers is just one step away from an “A” rating — “the big kahuna for insurance companies” — said Scott Charbonneau, chief actuary for the insurance firm.

Charbonneau said Bankers is on track to get an A rating in the next one-to-three years and that could lead to increased sales, especially for the business insurance products Bankers provides.

“There are some products you can only sell if you have an A rating,” he said. “In some cases a [corporate] board will say their company can only buy products from an A-rated carrier.”

Bankers Insurance is part of Bankers Financial Corp., a St. Petersburg-based insurance and financial services firm with $459.5 million in 2017 revenue, according to Florida Trend and Tampa Bay Business Journal research. It had a $220 million surplus in 2017, A.M. Best said.

The company is a major employer, with more than half of its 755 workers in the Tampa Bay area. It’s also an active civic partner. The 250-seat auditorium inside Johns Hopkins All Children’s new Research and Education Building bears the Bankers name, in recognition of the company’s support for the hospital. Bankers also works with Habitat of Humanity of Pinellas County and the St. Petersburg Area Command of the Salvation Army.

Bankers Insurance focuses on homeowners, small business and builders risk product and operates in five states: Florida, North Carolina, South Carolina, Texas and Louisiana.

Bankers Insurance lines of business (Source: A.M. Best)

The upgrade was part of Bankers’ regular annual review by A.M. Best, which provides credit ratings and other services for the insurance industry. It followed several major hurricanes — Florence and Michael this year, Irma and Harvey in 2017. The company has weathered more than 40 hurricanes since it began operating in 1976.

“A.M. Best’s announcement reflects the conservative reinsurance strategy we put in place to maintain our overall financial strength in the face of major hurricanes including Harvey, Irma, Michael and Florence,” Robert G. Menke, president of Bankers Insurance Group, said in the company’s own news release. “We continue to focus on delivering best-in-class service to our policyholders in the aftermath of a major event. Our response time and claims experience with a live representative is second to none following any major hurricane.”

The hurricanes did hit Bankers’ bottom line, Charbonneau said. Operating results are one of three elements A.M. Best considers when determining ratings. The others are the company’s risk management and its balance sheet, which was bolstered in 2016, when Bankers sold its life insurance business.

A.M. Best characterized Bankers’ balance sheet and its risk-adjusted capital as “very strong,” but said operating performance was marginal. The company has implemented several profitability initiatives, including identifying and eliminating undesirable business lines, not renewing unfavorable homeowners business, cutting risk in hurricane-prone areas, refining underwriting platforms and guidelines, and ending a quota share agreement, A.M. Best said.

The company has been retrenching and repositioning, both geographically and with product offerings, Charbonneau said. “We have products in the commercial book that we can put fully in other states that have proven to be successful in Florida.”

Several competitors, many new to the market, have lower premiums, but Bankers has not chased those rates, Charbonneau said.

“Now that we’ve had some hurricanes, people see what we can do in terms of storms,” he said. “Others have raised their rates … so people will start taking note of Bankers in the market place.”

A.M. Best also upgraded Bankers’ long-term issuer credit rating to “bbb” from “bbb-,” and revised the outlook to stable from positive, indicating stable financial and market trends.