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Risk Retention Group for Security Companies A.M. Best Rating Downgraded

Security Camera
December 19, 2016

A.M. Best has downgraded the Financial Strength Rating of Security America Risk Retention Group, Inc. (SARRG), from B++ (Good) to B+ (Good), according to a December 16, 2016, A.M. Best  press release.

The press release explained that the "rating downgrades and revised outlook reflect a sizeable surplus decrease of approximately 27% as of third-quarter 2016, as well as adverse reserve development mainly driven by a sizeable claim involving extra contractual obligation coverage, that in the opinion of SARRG, was not provided for and therefore was not reimbursable by the risk retention group's reinsurance program."

SARRG had net income of $228,683 and policyholder surplus of $2.7 million as of year-end 2015, according to the Demotech, Inc., Analysis of Risk Retention Groups Year-End 2015. The combined ratio for 2015 was 88.7 percent. The combined ratio for the first 9 months of 2016 was more than 200 percent, according to the Financial Strength Rating of A.M. Best.

According to the SARRG and Electronic Security Association (ESA) websites, SARRG is domiciled in Vermont and provides general liability and errors and omissions coverage to nearly 900 member companies that install, integrate, and monitor intrusion and fire detection, video surveillance, and electronic access control systems for commercial, residential, industrial, and governmental clients. It was developed by ESA, and it is registered in 50 states.

According to the SARRG website, ESA also sponsors the Security America Risk Purchasing Group, LLC (SARPG), a subsidiary of SARRG. The risk purchasing group was formed to provide ESA members with A-rated general liability and errors and omissions insurance when that rating is required. The policies that are provided through SARPG are written directly by Lloyd's of London, which is an A.M. Best A-rated surplus lines insurer.

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