KBRA Assigns Preliminary Rating to Surplus Notes of Clear Blue Specialty Insurance Company

KBRA assigns a preliminary rating of "BBB” with Stable Outlook to surplus notes (“Notes”) to be issued by Clear Blue Specialty Insurance Company (CBSIC) (KBRA Insurance Financial Strength Rating: A-/Stable). As surplus notes, the Notes are deeply subordinated and payments thereon are subject to the prior approval of the Texas Department of Insurance. If any payments are not approved, the payment will be extended until approval is given. Interest will continue to accrue on any unpaid principal but interest will not accrue on unpaid interest. The surplus notes are being issued to support growth in the company’s business.

CBSIC is one of four operating insurance carriers owned by Clear Blue Financial Holdings, LLC (CBFH). All four insurers participate in an intercompany pooling and reinsurance agreement including joint and several liability for one another. The carriers operate in all 50 states, with admitted licenses in 50 states and Puerto Rico. Each carrier writes program business that includes distinct books of commercial auto, homeowners, commercial property, and general liability business that is produced by managing general agents (MGA). Except for any limits or gaps in its quota share (QS) reinsurance, all the risk associated with Clear Blue’s business is ceded to unaffiliated reinsurance companies or to Clear Blue Re (CBRe), which in turn cedes to unaffiliated reinsurers.

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Methodologies

• Insurance: Insurer & Insurance Holding Company Global Rating Methodology
• ESG Global Rating Methodology

Disclosures

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a Designated Rating Organization (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1009481

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