AM Best has downgraded the Financial Strength Rating to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Rating to “a-” (Excellent) from “a” (Excellent) of Prime Insurance Company (Prime) (Chicago, IL). Additionally, AM Best has placed these Credit Ratings (ratings) under review with negative implications.

The ratings of Prime reflect its balance sheet strength, which AM Best categorizes as strong, as well as adequate operating performance, neutral business profile and appropriate enterprise risk management.

These rating actions reflect AM Best's concerns related to the adequacy of the company's loss reserves and its decreasing risk-adjusted capitalization contributing to a lower overall balance sheet strength assessment, and re-casted past years’ operating results that are no longer supportive of a “strong” operating performance assessment. Prime reported $111 million adverse reserve development in 2024, representing 31% of prior year-end reserves and 40 loss ratio points. For the first nine months of 2025, the company reported an additional $8 million of adverse reserve development with the potential for further adverse reserve development at year-end 2025.

Prime’s largest line of business is commercial auto liability. This sector has been challenged in recent years by rising loss costs and social inflation. As an excess and surplus writer, Prime has been successful in generating growth and profits in this difficult market through aggressive pricing and manuscripted terms and conditions. However, the company also writes this business on an admitted basis, through its affiliate, Prime Property & Casualty Insurance Inc., which is not rated by AM Best, but whose financials and reserves are included in the consolidated results.

The rating actions taken in this review not only consider the development and its impact on the company’s balance sheet, but its point impact on Prime’s operating results. Based on a re-cast of Prime’s accident years’ results, operating results are viewed as being more in line with that of its peers, which AM Best views as “adequate.”

The ratings will remain under review pending the filings of Prime’s fourth-quarter year-end 2025 statutory financial statements, the finalization of its year-end actuarial review and a meeting with management to better assess its reserves, risk-adjusted capital and any/all mitigation tactics available.

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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