OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has assigned a Financial Strength Rating of B++ (Good)
and a Long-Term Issuer Credit Rating of “bbb+” to Centerline Property
and Casualty Insurance Company (Centerline) (Knoxville, TN). The outlook
assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Centerline’s balance sheet strength, which AM Best
categorizes as very strong, as well as its adequate operating
performance, limited business profile and appropriate enterprise risk
management.

Centerline was founded in 1970 as a licensed commercial insurer, and
primarily and successfully covered affiliated insurance risks in-house
for its parent, Watkins Associated Industries, Inc. (WAI) until 2014,
when it registered as a Tennessee-domiciled pure captive for WAI. It has
expanded its scope to that of a fully licensed commercial insurer
domiciled in Tennessee as of Jan. 1, 2019. WAI is an 85-year-old
Florida-incorporated, family-owned conglomerate engaged in five major
activities: trucking, food processing, building material manufacturing,
real estate development and operations, and insurance services
throughout the United States. WAI ownership and Centerline’s executive
management are interlocked, developing attributes over time of a
methodical and risk-averse culture in synergistic, long-term ventures.

In its risk management role for WAI, Centerline’s underwriting
performance has been very good as a small, niche commercial lines
insurer providing insurance products concentrated in the commercial
transportation sector. Products written by Centerline include affiliated
commercial auto liability/physical damage, general liability and cargo.
The company has two primary lines of business: affiliated company
business for WAI; and non-affiliated small fleet trucking coverage
fronted through State National Insurance Company, Inc. It is currently
developing a new third party cargo product with low insurance risk and a
short tail, the largest risk of which is execution with innovative
distribution plans. AM Best will monitor management’s execution of its
business plans for take-up and profitability, especially as it relates
to the new third party cargo product.

Positive rating action could occur in the near to medium term if
underwriting and operating results continue to outperform the company’s
peers and achieve management’s projections, as it transitions from a
captive to a fully licensed commercial insurance writer or if it
maintains its strongest Best’s Capital Adequacy Ratio (BCAR) scores
while materially growing its surplus over time through underwriting and
operating earnings. Negative rating action could occur if the company’s
risk-adjusted capitalization, as measured by BCAR, or surplus size
declines materially; if the company’s underwriting or operating
performance weakens and negatively impacts surplus or risk-based
capitalization; or if underwriting and operating results underperform
materially or differ from management forecasts.

AM Best remains the leading rating agency of alternative risk transfer
entities, with more than 200 such vehicles rated in the United States
and throughout the world. For current Best’s Credit Ratings and
independent data on the captive and alternative risk transfer insurance
market, please visit www.ambest.com/captive.

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 Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Dan Teclaw
Senior Financial Analyst
+1 908
439 2200, ext. 5394
[email protected]

Susan Molineux
Associate Director
+1 908 439
2200, ext. 5829
[email protected]

Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
[email protected]

Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
[email protected]